Ofgem has confirmed household energy bills will fall by around 7 per cent from July in its latest price cap update.
The regulator said on Friday that the typical bill is expected to fall by £129 to £1,720 per year when its new price cap comes into force.
The price cap, which sets the limit on how much firms can charge customers per unit of energy, is currently at around £1,849 for a typical household after three consecutive increases in bills.
It comes after US president Donald Trump's aggressive tariff plans led to a significant slump in gas and oil prices.
However, the drop is slightly less than the previously forecast 9 per cent fall following an easing of trade tensions in recent weeks.
News of a fall in energy costs will come as a relief for households, who suffered through an "awful April" of bill rises, including Ofgem's last 6.4 per cent price cap increase.
Under-pressure households have also been hit with the biggest increase to water bills since at least February 1988, alongside steep increases across bills for council tax, mobile and broadband tariffs, as well as road tax.
Bill rises have led to Consumer Prices Index (CPI) inflation jumping to 3.5 per cent in April, up from 2.6 per cent in March and the highest since January 2024.
On Monday, Craig Lowrey, principal consultant at Cornwall Insight, said: "The fall in the price cap is a welcome development and will bring much-needed breathing space for households after a prolonged period of high energy costs.
"It's a step in the right direction, but it should be taken in context.
"Prices are falling, but not by enough for the numerous households struggling under the weight of a cost-of-living crisis, and bills remain well above the levels seen at the start of the decade.
"As such, there remains a risk that energy will remain unaffordable for many."
Matthew Cole, CEO of Fuel Bank Foundation warned this week the drop in energy price cap from July “won’t go far enough” for those who are “already struggling to make ends meet”.
“People are still being forced to make tough choices — between topping up the meter or putting food on the table,” he said.
Unite general secretary Sharon Graham, also does not believe the cap will be enough. She said: “Ofgem has lowered its cap, but our bills are still sky high and nobody has any faith left in this regulator, which allows multinational companies to extract obscene profits from our energy system.
“We urgently need to reverse the market madness and address the real causes of the lingering energy crisis.”
Citizens Advice chief executive Clare Moriarty agreed that the drop will “ease the burden of high bills for some households”. But she warned it’s not enough for those who are “paying off a mountain of debt”.
She said: “The Government must not lose perspective: bills will still be 52 per cent higher than before the energy crisis and nearly seven million people live in households that have fallen behind on bills.
“Today’s announcement will be cold comfort to the millions paying off a mountain of debt on top of their monthly costs.
“The Government has said it hopes to provide more support to pensioners this winter but we know that people with children are often struggling most of all with energy. It must provide more targeted energy bill support to those hardest hit, and upgrade five million homes with money-saving energy efficiency measures.”
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “The Government’s reverse ferret on Winter Fuel Payments are a clear sign that ministers know that people are struggling with energy bills – but sticking-plaster solutions and U-turns won’t help people in the long-term.
“While bills may fall slightly in July, they’re still significantly higher than before the energy crisis and remain tied to the unpredictable cost of fossil fuels. Without urgent reform and real investment, millions will continue to face unaffordable bills and cold homes.”
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