Centrica, the owner of British Gas, said today that it is raising gas prices by 35 per cent and electricity by 9 per cent after profits at its residential business fell by 69 per cent in the first half.

The move is in response to a rise of £2 billion in market commodity prices.

Centrica also announced that dual-fuel prices will rise by 25 per cent, meaning that its 16 million customers face paying an extra £261 a year for energy, taking the average bill to £1,305.

The price rises are the most severe to hit consumers this year and follow EDF's decision on Friday to increase electricity prices by 17 per cent and gas bills by 22 per cent.

Centrica blamed soaring wholesale gas prices, which have risen from 48p to 90.8p per therm, for the increase in household bills. Forward wholesale gas prices for the coming winter have increased by 89 per cent on the same period last year.

Phil Bentley, managing director at British Gas, said: "We very much regret that we have had to make this decision at a time when many household budgets are already under pressure.

"The simple fact, though, is that we have entered an era of unprecedented high world energy prices.

"The only answer to cope with higher energy prices, I’m afraid, is for all of us to be more energy efficient and we will be contacting all our British Gas customers to show how they can save energy to try and offset these price rises.”

Money Central: 10 tips to beat the energy price hike

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive