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Martin Lewis' stark warning on 'outrageous' gas price rise
21 September 2021, 12:15 | Updated: 21 September 2021, 18:21
Money Saving Expert's Martin Lewis has issued a stark warning to LBC listeners: expect another hike in gas prices in a few months' time.
Speaking to LBC's James O'Brien, the finance expert explained that Ofgem's price cap - which is already seeing a huge rise at the start of October - could increase by another £200 in April 2022.
"On typical use the price cap is £1,138 a year," said Mr Lewis, explaining the current price cap.
"On the 1st October that will go up to £1,377 which is a 12 per cent hike."
He went on to explain that the price cap change in October was dictated by prices for the 6-month period to the end of July - so it will not account for the current surge in prices.
He explained that the "timelag" means that the huge increase in prices currently being seen will not be mirrored in the price cap until April 2022.
"The price cap we're moving to... is not based on current prices, it's based on past prices," said Mr Lewis.
"The first of April next year - 2022 - the price cap will change again because it's six monthly.
"That price cap is based on prices from the start of August until the end of January, so we are in that price period right now - two months in."
He explained: "Based on the first two months - and it doesn't look like wholesale prices will drop in the next month or two, they might after that - the price cap on the 1st April will be £1,455, so up another £200 pounds after the rise that we're facing already.
He declared: "That is an unprecedented rise, it's outrageous, I hope it won't happen."
Mr Lewis also said that many consumers were in "damage limitation time" when it came to their gas prices, and explained how the whole concept of the 'price cap' was misleading.
"The price cap is completely misnamed - they shouldn't have called it a price cap because it isn't a price cap," he said.
"The reason it isn't a price cap is because theres no cap on prices, theres a cap on the rate that you pay.
"So when I quote the price cap I'm quoting for someone with typical use, if you use more your price caps higher, if you use less your price cap is lower."