The energy price cap is keeping bills artificially high and fuelling inflation, an influential think tank has warned.

The Centre for Policy Studies (CPS) is urging ministers to scrap the cap, arguing that it prevents people from accessing cheaper deals.

The energy price cap was originally introduced in 2017 as a temporary measure to stop energy companies overcharging loyal customers who didn’t shop around for deals. The Government argued it would protect vulnerable customers, such as those on prepayment meters or with a disability.

The cap sets the maximum price energy companies can charge households per unit of energy and is based on the wholesale cost of power. It is reviewed every three months and currently limits the monthly bill for a typical household to £2,074.

However, the CPS said the cap had in practice become a state-mandated price, with limited incentives for providers to offer better deals.