Millions of people face soaring energy bills after EDF Energy announced double-digit increases to its gas tariff yesterday.

The move, coming two weeks after nPower raised its prices, is expected to prompt a round of increases among all the big energy companies.

Experts say that British Gas, the biggest supplier, will be the next to raise prices. Mark Todd, of the Energyhelpline, a price comparison service, said: “British Gas could move as early as Thursday, and we believe it will increase prices by around 15 per cent.”

From Friday, EDF will increase its gas tariff by an average of 12.9 per cent and charge 7.9 per cent more for electricity. This will increase the annual utility bill in an average household by £100 to £1,007, according to Energywatch, the industry watchdog.

EDF and nPower blame the inflation-busting price increases on wholesale prices, which have doubled over the past year. But the companies were attacked for not passing on the full price cuts to their customers when wholesale prices slumped in 2006.

A sharp rise in utility costs will come as a blow to consumers already struggling with higher petrol prices and mortgage bills. Debt charities said that the increased pressure on homeowners was likely to aggravate debt problems. Moira Haynes, of Citizen’s Advice, said: “In the year to April 2007 the number of gas and electricity debt problems we handled shot up by a third to over 60,000. We are concerned that even more people will now be squeezed by price rises way above inflation.”

The aggressive moves by the energy companies increased fears that a renewed surge in inflation this year, driven by dearer fuel, will make it tough for the Bank of England to cut interest rates to bolster the economy.

Last month’s figures showed inflation stubbornly above the Bank’s 2 per cent target, with inflation holding at 2.1 per cent for the third month despite City forecasts that it would fall.

Jonathan Loynes, of Capital Economics, said that consumer price inflation could rise to 3 per cent by the middle of the year thanks to the toll from more expensive energy. “Rising inflation will present a serious test of nerve for the MPC as it ponders how to respond to the slowdown in the economy,” he said.

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