Martin Lewis warns households will pay 40% more for energy bills next year but you should still ‘do nothing’

MARTIN Lewis has revealed how energy bills will likely go up by as much as 40% early next year.

Despite the stark warning though, he’s stuck by his advice that households should “do nothing”.

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It’s advice he’s adopted since chaos ensued at the beginning of October, especially as the devastating fallout of price hikes meant providers started to go bust.

The money mogul used to be the first to urge households to switch to cheaper deals, and shop around for better prices.

Now the entire market has been hit, there is little to no competition to choose from anyway.

But speaking on the telly last Thursday, Martin broke down exactly what’s going on with the energy market at the moment, and how sitting tight is your best bet at avoiding extra costs.

Brits are experiencing a cost of living crisis, and the doomed energy market isn’t helping, so many have looked to the savings expert for advice on what to do about rising costs.

On The Martin Lewis Money Show he explained to viewers how wholesale gas is currently at four times its usual price, which is something that’s never been seen before.

He said in “normal times” cheap fixed deals aren’t usually the overall cheapest on offer, but that has been completely overruled by the new prices we’re seeing in the current energy crisis.

“Last November the cheapest deal was around £830 a year for someone on typical use, the typical fix you can get today is £1,730,” he said.

“So that is over double the amount you would have paid a year ago, a huge and phenomenal increase.”

The reason it’s likely to go up as much as 40% or even beyond next year though is based on the pattern we’ve seen so far in the increase of the price cap.

It’s designed to stop suppliers overcharging customers for their energy bills as it places a maximum that you can be charged.

On October 1 the new energy price cap, set by Ofgem, came into force, meaning a hike of £139 in bills for many households.

That was also an increase of 12% Martin explained, but it’s based on how prices had looked over the past six months and the average they worked out at.

Now that wholesale prices have rocketed, the same maths of finding a median over the same period of time means prices will likely be up by 40%, Martin revealed, while pointing to a graphic that showed how the prices would shape up.

As a consequence, he urged viewers to do nothing, given how expensive the cheapest fixed tariffs are at the moment.

If they stick with what they’ve got now there’s a chance they could be on that same rate beyond April as it is fixed and can’t change regardless of how much prices go up with the next price cap update.

Martin said: “A year ago I would have been shouting at you, what are you on the price cap for it’s way more expensive than the cheapest deals, get yourself the cheapest deals.

“But now, because the price cap only moves every six months, and it’s set based on a timeline, the price cap is now the cheapest meaningful tariff you can get.

“There are no savings you can have by moving.”

The advice rings true with other warnings that have come of late too, other experts have warned that the price cap could increase more frequently to keep up with soaring rices.

So sticking with a fixed tariff could mean you happen to skip over the hikes if you’re still contracted into your cheaper deal, secured months before.

This post first appeared on thesun.co.uk