New Energy Price Guarantee impact on State Pension increase 2023?

NedS

molerat said:

scobie said:

People are forgetting that EPG is to stop power prices and inflation rising too much. They’re still going to rise in a October, not fall. 

Which means that inflation is likely to rise too, albeit not hopefully to the 18-22% figures bandied around for 2023 by some commentators.  

Yes, all it is going to do is slow the rate of the rise and hopefully reduce the peak.  It can have no effect on the September figure as nothing will have changed during the period being assessed.

Agreed, the EPG should have no affect on this September's CPI reading, and will effectively remove energy costs from inflation readings for the next 2 years as the price will be static and won't change.

By capping the price rather than allowing it to keep rising and giving people handouts to cover the cost of the rise, the government have, as they identified, reduced the amount by which inflation will increase next year meaning the very high 18% peak predictions are now far less likely.

It's far too early to say, but hopefully inflation will fall back below 10% next year although I'm still expecting it to be high. I think next year we will see far more increases in prices passed on by businesses who may have been be trying not to pass those costs on up until now. Capping their energy costs for 6 months is great and gets them through this winter, but without ongoing support there will be another crisis next April as all we have done is kick the can 6 months down the road.

RG2015

NedS said:

molerat said:

scobie said:

People are forgetting that EPG is to stop power prices and inflation rising too much. They’re still going to rise in a October, not fall. 

Which means that inflation is likely to rise too, albeit not hopefully to the 18-22% figures bandied around for 2023 by some commentators.  

Yes, all it is going to do is slow the rate of the rise and hopefully reduce the peak.  It can have no effect on the September figure as nothing will have changed during the period being assessed.

Agreed, the EPG should have no affect on this September's CPI reading, and will effectively remove energy costs from inflation readings for the next 2 years as the price will be static and won't change.

I agree about September 2022, but are you sure about the next 2 years' inflation?

Energy prices in October 2022 will rise, just not as much as they would have risen under the previous price cap proposal.

Hence the energy element within the cpi index for Oct 2022 will be higher than the equivalent figure from Oct 2021.

However, I have just remembered about the £400 rebate covering Oct 2022 to Mar 2023.

If the average monthly bill is increasing by £44 but being rebated by £66 or £67 the net effect is a monthly decrease of £22 or £23.

Hence upon reconsideration, you are correct.

Grumpy_chap

EPG cannot impact the September price movements as the EPG is only in place from October. It has even been brought in too late to have any "at the edges" impact in September, for example companies that implement price change from 1st September (which is unusual anyway).

As to the Triple Lock, it has been said that it will stay and most of the 12-month price change that gets captured at September figures has already happened and is therefore baked in - October 2021 - August 2022.  Time for anything much to change in September 2022 is short, so it will be the outcome as whatever the outcome is.

MX5huggy said:

higher rate tax  Liz has her back with her proposal to raise the threshold to £80k. 

Has that been announced?

NedS

RG2015 said:

I agree about September 2022, but are you sure about the next 2 years' inflation?

Energy prices in October 2022 will rise, just not as much as they would have risen under the previous price cap proposal.

Hence the energy element within the cpi index for Oct 2022 will be higher than the equivalent figure from Oct 2021.

Agreed, the price will go up in October and that will be reflected in year on year inflation. But from October onward, the price will be fixed.

RG2015 said:

However, I have just remembered about the £400 rebate covering Oct 2022 to Mar 2023.

If the average monthly bill is increasing by £44 but being rebated by £66 or £67 the net effect is a monthly decrease of £22 or £23.

Hence upon reconsideration, you are correct.

But here you are wrong (and so was I). By refunding the £400, it will still be reflected in inflation as (a) the bills have gone up incorporating that £400 (average increase from £1971 to £2500), and (b) that £400 will be put into people's pockets to spend (on the increased energy prices or otherwise) so will affect inflation in the later half of this year and into the early part of next.

Ultimately there will be an average 26.8% rise (£1971 -> £2500) and that will be reflected in inflation readings (but obviously far less impact than a rise to £3549 would have had, and also lower than the contributory increases to inflation we have seen this year where prices have almost doubled).

NedS

Grumpy_chap said:

MX5huggy said:

higher rate tax  Liz has her back with her proposal to raise the threshold to £80k. 

Has that been announced?

No, not yet.

Grumpy_chap

NedS said:

Grumpy_chap said:

MX5huggy said:

higher rate tax  Liz has her back with her proposal to raise the threshold to £80k. 

Has that been announced?

No, not yet.

Thanks.
Was that one of her promises?

Grumpy_chap

NedS said:

RG2015 said:

I agree about September 2022, but are you sure about the next 2 years' inflation?

Energy prices in October 2022 will rise, just not as much as they would have risen under the previous price cap proposal.

Hence the energy element within the cpi index for Oct 2022 will be higher than the equivalent figure from Oct 2021.

Agreed, the price will go up in October and that will be reflected in year on year inflation. But from October onward, the price will be fixed.

RG2015 said:

However, I have just remembered about the £400 rebate covering Oct 2022 to Mar 2023.

If the average monthly bill is increasing by £44 but being rebated by £66 or £67 the net effect is a monthly decrease of £22 or £23.

Hence upon reconsideration, you are correct.

But here you are wrong (and so was I). By refunding the £400, it will still be reflected in inflation as (a) the bills have gone up incorporating that £400 (average increase from £1971 to £2500), and (b) that £400 will be put into people's pockets to spend (on the increased energy prices or otherwise) so will affect inflation in the later half of this year and into the early part of next.

Ultimately there will be an average 26.8% rise (£1971 -> £2500) and that will be reflected in inflation readings (but obviously far less impact than a rise to £3549 would have had, and also lower than the contributory increases to inflation we have seen this year where prices have almost doubled).

Isn't the big unknown on energy price inflation now what happens at the end of the price cap?

RG2015

Grumpy_chap said:

NedS said:

RG2015 said:

I agree about September 2022, but are you sure about the next 2 years' inflation?

Energy prices in October 2022 will rise, just not as much as they would have risen under the previous price cap proposal.

Hence the energy element within the cpi index for Oct 2022 will be higher than the equivalent figure from Oct 2021.

Agreed, the price will go up in October and that will be reflected in year on year inflation. But from October onward, the price will be fixed.

RG2015 said:

However, I have just remembered about the £400 rebate covering Oct 2022 to Mar 2023.

If the average monthly bill is increasing by £44 but being rebated by £66 or £67 the net effect is a monthly decrease of £22 or £23.

Hence upon reconsideration, you are correct.

But here you are wrong (and so was I). By refunding the £400, it will still be reflected in inflation as (a) the bills have gone up incorporating that £400 (average increase from £1971 to £2500), and (b) that £400 will be put into people's pockets to spend (on the increased energy prices or otherwise) so will affect inflation in the later half of this year and into the early part of next.

Ultimately there will be an average 26.8% rise (£1971 -> £2500) and that will be reflected in inflation readings (but obviously far less impact than a rise to £3549 would have had, and also lower than the contributory increases to inflation we have seen this year where prices have almost doubled).

Isn't the big unknown on energy price inflation now what happens at the end of the price cap?

True, but that won't arrive until October 2024.

MACKEM99

MX5huggy said:

MACKEM99 said:

Merlin139 said:

dealyboy said:

I was thinking that there has been a lot of talk about state pensioners getting a 10% + increase whereas the working population are getting 5-7%, if they're lucky (probably the wrong term). It might just ease the tension a bit with the unions if state pensioners were seen to be in line.

A useful political expedient?

10% increase on £9630 is a hell of a lot less than 5-7% on £25000 to £40000

Plus of course there are many on a lot less than £9630.

And many on more, mum is probably looking at being dragged back into higher rate tax by the CPI on her SP, 40 year NHS and late husbands LGPS CPI increases. But Liz has her back with her proposal to raise the threshold to £80k. 

Should you not be happy for your mum?

RG2015

NedS said:

RG2015 said:

I agree about September 2022, but are you sure about the next 2 years' inflation?

Energy prices in October 2022 will rise, just not as much as they would have risen under the previous price cap proposal.

Hence the energy element within the cpi index for Oct 2022 will be higher than the equivalent figure from Oct 2021.

Agreed, the price will go up in October and that will be reflected in year on year inflation. But from October onward, the price will be fixed.

Let's forget for a moment the effect of the £400 rebate.

Energy prices will be fixed from October 2022 but the energy cost in October 2022 will still be higher than the cost in October 2021.

This annual energy inflation will remain until September 2023. It is only when we get to October 2023, when that month is compared with October 2022 that energy inflation will be zero.