Martin Lewis explains 'simple thing to do now' ahead of energy price cap rise

Martin Lewis has issued a warning over the "simple thing" energy customers must do ahead of the price cap change in January. Energy regulator Ofgem has today announced a 1.2% increase of the energy price cap for the period covering January-March 2025.

The change to the price cap – which sets a maximum rate per unit and standing charge that can be billed to customers for their energy use – will rise by £21 for an average household on British Gas, EDF, EON, Ovo, Octopus bills per year or around £1.75 a month.

BBC and ITV star Martin warned: "Over the next year it's predicted you will pay a couple of percent more than now on average. The cheapest fixed tariffs available right now are around 5% LESS than the current price cap. Therefore the simple thing to do is lock into a fix now to save money and guarantee no future hikes.”

READ MORE All the nine parts of UK facing 15 inches of snow on Saturday

Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “This latest increase in the price cap underlines the continuing volatility of the energy market, which is still experiencing the lingering effects of the energy crisis. While the forecasted reductions from April offer some hope, they remain well above historical norms and do little to alleviate the immediate pressure on consumers this winter.

"There’s little point in waiting for the market to settle on its own - there’s no going back to so-called ‘normal’ prices, unfortunately, this is the new reality. Any reform of the price cap will be just one piece of the solution - what’s urgently needed is a comprehensive approach, including targeted support such as social tariffs and sustained investment in domestic renewable energy sources, to help shield consumers from ongoing market shocks.”.

Riz Malik, Independent Financial Adviser at Southend-on-Sea-based R3 Wealth commented: "The rise in the energy price cap is another financial strain for households across the country. It comes as mortgage rates and rents also rise. Only a month ago many of us believed that things were going to get better, but now they look set to get worse. When will the government understand that higher bills means less discretionary spending, which in turn hits the economy’s growth prospects? The question remains, why are our energy costs substantially greater than those of many other countries?"

John Choong, Head of Equities and Markets at London-based Investors Edge commented: "The latest EPC increase spotlights a critical economic dynamic — the powerful yet often overlooked relationship between energy and food prices. Energy costs cascade through the entire food production chain, creating an inflationary feedback loop reminiscent of 2022. Our research shows these interlinked components influence at least 38% of the CPI basket, presenting a major challenge to the disinflation narrative required for further rate cuts. As such, markets will now reassess their 2025 rate cut expectations as elevated energy costs may impact food inflation. Thus, the concerning aspect is how this energy-food nexus will end up shaping both inflation expectations and wage demands, potentially undermining progress on services inflation. On that basis, we now expect headline inflation to remain around 2.5% in Q1, with the Bank of England likely delaying rate cuts until March or May, particularly if higher energy prices continue to permeate other sectors."