Martin Lewis has explained if energy bills are likely to get cheaper after Donald Trump caused chaos with his “Liberation Day” tariffs. The US President sent global markets off on a rollercoaster few days, including historic falls followed by record rises.
Donald Trump announced a 90-day pause on most of the tariffs, but is now locked in a tit-for-tat spat with China, which has now been slapped with 145% tariffs on all goods. The latest development saw the White House say that tariffs on imports of Chinese-made smartphones and some other electronics devices would be moved to a different levy “bucket”.
In an update, Martin Lewis explained how the Donald Trump “effect” has also seen the price of oil and gas fall, which could lead to lower energy prices in the future – however, the MoneySavingExpert.com founder says they won’t go down by that much. Millions of households are covered by the Ofgem energy price cap, the price of which is dictated by wholesale energy prices.
Wholesale energy prices are down around 40% – but Martin explained that this doesn’t mean energy bills will fall by that much, as the price cap is based on average wholesale prices for a three-month assessment period. The next price cap, which will come into effect in July, will be based on average wholesale prices between the middle of February to the middle of May.
The price cap rose by 6.4% in April, taking the typical energy bill from £1,738 a year to £1,849. The latest predictions are pricing in a fall of between 6% and 8% for the July price cap.
In a video posted on social media, Martin said: “If things continue to go down, and the predictions for the worldwide economy worsen, we could see the prices dropping even further.
“But remember, because it’s a three-month average from February to May that dictates the July price cap, even if it drops a lot now, you’ve already got nearly two months’ worth of data in. It won’t have the profound effect you’d think it will.”
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The energy price cap is updated every three months, so after July, it will be updated again in October – but Martin said it is too soon to say for sure if energy prices will drop further this winter. He said: “If prices continue to stay low, then it would be the October price cap, and the following January price cap that would be lower.
“Now, currently, it is predicted that we’ll see another drop of about 3% in October, and then it’ll stay about the same in January. But that’s really crystal ball gazing.”
Martin explained how fixed rate energy tariffs have dropped, but only slightly. The current cheapest fix is about 16% less than the current price cap, compared to around 13% or 14% less a few weeks ago. Martin recommended doing a price comparison now and fixing your energy bill if you can.
He said: “You can still fix now far less than you will pay on the price cap, and less than the price cap is predicted to drop. So if the predictions are right, you would be far better going onto MoneySavingExpert’s Cheap Energy Club comparison and locking in a fix. But there is an ‘if’ on predictions; things could change even more. So just have a look at the early exit penalties if you do fix.”
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