Sixteen million customers of British Gas will pay about a third more for gas and electricity from next month, with average bills rising to £1,300 a year.

The other five major energy companies - E.ON, EDF, Scottish and Southern Energy, ScottishPower and npower - are expected to announce similar increases. Centrica, which owns British Gas, issued a fresh warning that domestic gas bills will rise from about £600 now to more than £1,000 per year if oil prices remain high.

A report published by the company today says that oil prices, currently more than $140 per barrel, are forcing a tectonic shift in Britain’s wholesale energy markets. Commercial gas contracts are indexed to the price of oil.

Jake Ulrich, the managing director of Centrica Energy, said that people would have to change their habits. He told Channel 4 News: “I think people will use less energy and I hate to go back to the Jimmy Carter days in the US but maybe it’s two jumpers instead of one.”

Meanwhile, the Government gave warning that households could expect to spend 10 per cent of their average weekly income on food this year.

Rising global food prices - plus the impact of higher oil, gas and electricity costs on farming, food processing, refrigeration, food transport and retailers - will push up the proportion of household income spent on food by 1 per cent within a year. The poorest families, who already spend a greater proportion of their income on food, will be hit hardest.

Fuel poverty campaigners were outraged at the prospect of another round of energy price rises. About 4.5 million households are currently living in fuel poverty, defined as having to spend more than 10 per cent of household income on energy.

Maria Wardrobe, of National Energy Action, said that the social impact of the projected gas increases was unthinkable. She said that it would tip a further 1.6 million households into fuel poverty, leaving government plans to eradicate the problem for the vulnerable by 2010 in tatters.

Centrica, the UK’s largest domestic energy supplier, blames the runaway prices on the dwindling supply of gas from the North Sea, which is forcing suppliers to import more.

About 40 per cent of the gas consumed in the UK this year will be imported, either by pipeline from the Netherlands and Norway or by ship as liquefied natural gas from countries such as Algeria, Qatar and Malaysia. Last year, 27 per cent of Britain’s gas was imported. That proportion is predicted to rise to 75 per cent by 2015.

Money Central: 10 tips to beat the 40% energy price hike

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts