Energy bills will eat up a sixth of wages

Debapratim De of consultancy Deloitte said the share of salary spent on energy is likely to be higher for those with lower incomes, whose wages have not increased significantly in recent years. “Energy could cost lower-income families a quarter of their income after housing costs,” he said.

Janet Mui, Asset Manager of Brewin Dolphin, said wage growth would likely be under pressure with a weakened economy, it reduces the bargaining power of workers.

She added: “European wholesale natural gas and electricity prices continue to rise, boosted by heatwave and dry weather.

“From 2023, Ofgem will adjust its price cap every quarter, so that the average consumer will feel any fluctuations in energy prices more often.

“Businesses are in an even worse position as their energy bills are not protected by any cap. Ultimately, these higher bills will be passed on to consumers or absorbed as a reduction in profits.

“While international energy prices are beyond government control, this is an extremely critical matter that needs to be addressed urgently.”