The price rises follow those by Powergen Domestic customers of British Gas are to face increased prices of 5.9% because of "cost pressures", the company announced on Monday. The increase will take effect from 10 January for 12.5 million customers and on 1 March for 2.5 million pre-payment customers.

The rises will mean an extra 28p a week on electricity and 39p a week on gas for the average domestic customer.

It comes three weeks after Powergen said it was raising energy prices.

Wholesale

Mark Clare, managing director of British Gas, said: "Underlying wholesale energy costs have risen since the summer and continue to rise.

"Like other suppliers, we are being forced to reflect these increased costs in our prices.

"Over the last few months we have been absorbing these additional costs ourselves, but unfortunately we are no longer able to do so."

British Gas said underlying wholesale gas prices have increased by 15% over the past year, with predictions of a further 21% rise in 2004.

The price increases will also apply north of the border for Scottish Gas customers.

However, consumer groups poured scorn on the reasons given for the price increase.

"There were significant reductions in wholesale energy prices over the past few years but these were not passed on to consumers. It seems grossly unfair that consumers should now have to pay significantly more for their gas and electricity," Allan Asher chief executive of Energywatch said