British Gas has begun notifying its customers it will raise domestic tariffs for gas by an average 18%1, and for electricity by an average 16%1, on 18 August 2011.

British Gas recognises the difficulties customers are facing in the current economic climate, but the announcement follows steep rises in wholesale costs, which have increased 30% since last winter because of higher global demand for gas, driven by increased consumption in Asia and the impact on supply of unrest in the Middle East and North Africa.

Britain now imports almost 50% of the gas it needs from other countries around the world, and British Gas has to pay the market rate in the global wholesale energy market.

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British Gas aims to offer competitive prices and protect customers from cost increases in the wholesale market as far as possible. But the company cannot continue to make a loss on the energy it sells, as it needs to be a profitable business in order to invest in future sources of energy for Britain. The company is investing around £1.5billion this year alone in securing new sources of energy for its customers.

British Gas Managing Director, Phil Bentley, said: "We know there is never a good time to raise prices, but we are buying in a global energy market and have to pay the market rate.

"Rising wholesale costs is an issue facing all energy suppliers. Our advice to customers is to wait and see what happens in the energy retail market as a whole before making any decisions about switching supplier.

"In the mean time, they should get in touch with us and ask about the simple ways we're offering to help keep bills under control."

(CD/KMcA)