Businesses across the UK are bracing for higher costs this autumn as energy prices edge upward, with Ofgem’s October price cap rise set to push bills higher for households and ripple through to commercial users.

From 1 October 2025, Ofgem will raise the domestic energy price cap by around 2%, meaning a typical household bill will climb to approximately £1,755 a year. Although the cap applies only to domestic customers, experts warn that the change reflects underlying increases in wholesale energy prices, policy levies, and network charges that also influence commercial tariffs.

Rising Costs and Squeezed Margins

Energy-intensive industries such as manufacturing, hospitality, and data centres are expected to face the greatest strain as electricity and gas bills climb. Businesses locked into fixed contracts may avoid the immediate shock, but renewal rates are widely predicted to surge in line with wholesale costs.

“Energy costs are one of the largest overheads for many businesses,” said Molly Monks from Parker Walsh, a consultancy advising UK businesses. “Even a slight increase in prices can effect tight margins, particularly for smaller firms with less financial flexibility.”

Budgeting Under Pressure

The increase comes at a time when many firms are already grappling with high inflation and tighter consumer spending. Rising bills are expected to complicate budgeting and planning, making it harder for leaders to forecast expenditure in the months ahead.

Knock-On Effects for Consumers

With costs mounting, some companies are expected to pass increases onto customers through higher prices. That could mean more expensive meals, services, or products in sectors such as hospitality, leisure, and retail. But with demand already fragile, businesses may struggle to raise prices without deterring customers.

Push Toward Energy Efficiency

According to Molly Monks of Parker Walsh, the looming rise is also accelerating a shift toward greater energy efficiency. Many firms are exploring measures such as LED lighting, improved insulation, or renewable energy sources like rooftop solar. Others are weighing the benefits of renegotiating fixed-rate contracts to mitigate future shocks.

Looking Ahead

While the October rise may appear modest, Parker Walsh warns it signals a continued period of volatility in the UK energy market. Businesses that adapt quickly, by cutting usage, improving efficiency, or finding smarter procurement strategies, will be better placed to weather what could be another challenging winter.

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