Millions of families are facing another jump in household bills amid reports that the UK's largest energy supplier plans to hike its tariffs.

Centrica-owned British Gas, which serves about 12 million homes, is preparing to announce as early as tomorrow that it is increasing electricity and gas charges by between 5-10%.

The average British Gas annual dual-fuel bill for gas and electricity currently stands at £1,260 - meaning a 5% increase would add £63, while an 8% rise would put on £100.

A British Gas spokesman said: "We do not comment on future pricing movements. We do not comment on speculation about future pricing movements."

The reports come as rival SSE prepares to increase tariffs by 9% on average on Monday, hitting about five million electricity customers and 3.4 million gas customers.

British Gas put gas and electricity tariffs up by 18% and 16% respectively in August 2011, blaming higher wholesale costs, but this was followed by a drop of 5% in electricity tariffs in January when prices eased.

The supplier is expected to say it was forced into the move by higher wholesale prices and the rising cost of using the National Grid network.

British Gas warned in May that its costs were rising, with wholesale gas prices 15% higher for the coming winter and other charges set to add around £50 to the cost of supplying the average household this year.

But the division provoked outrage in July after it unveiled a 23% leap in profits, admitting last year's hefty price rises helped it pull in £345 million in operating profits in the first half of the year.

Commenting on speculation that bills were set to increase again, Caroline Flint, Labour's shadow energy and climate change secretary, said people will "not understand why British Gas are putting prices up".

She said: "Unless ministers get to grips with spiralling energy bills, people will rightly think that this Government is completely out of touch with families and pensioners struggling to make ends meet."

Other big suppliers - including EDF, Scottish Power and nPower - are not expected to follow suit and announce higher prices. E.ON is the only supplier to guarantee a price freeze for 2012.

Further utility bill increases will play havoc with the Bank of England's inflation forecasts, which predicted a gradual slide in the consumer price index rate towards the end of the year and into 2013.

While inflation has fallen from 5.2% in September last year to 2.5% in August this year, many economists expect the rate to rise again as droughts in the US are likely to mean higher food prices.

Further energy price hikes will throw households' already stretched budgets into "turmoil", consumer groups warned today.

They have urged people to take action to keep their bills down, although some of the cheapest deals on the market have already disappeared.

Many households have already been squeezed by increased mortgage costs after a string of lenders increased their standard variable rates (SVRs) in recent months, affecting more than a million home owners.

Santander's hike to its SVR last week meant a few hundred thousand of its customers saw an average increase of £26 a month for a £100,000 mortgage.

Food prices have also been predicted to rise following poor harvests due to the wet British weather as well as the worst drought in 50 years in the US and a heatwave in Russia.

Recent research from consumer website MoneySupermarket found that a third of adults believe a £50 rise in their monthly outgoings would push them to financial breaking point.

Citizens Advice chief executive Gillian Guy said: "Many British Gas customers will find the possibility of a price rise really frightening.

"Bill increases throw already stretched budgets into turmoil - with people forced to find more ways to scrimp and save. But there are things that people can do to save money on their fuel bills."

Citizens Advice is running a Big Energy Saving Week from October 22 to 27, when it will help consumers find ways to cut their fuel bills.

Consumer experts have said that people currently on a standard tariff should be looking into a cheap fixed tariff, which could save them more than £200 a year. Some fixed-rate tariffs also guarantee no price hikes for two winters.

Scott Byrom, energy expert at MoneySupermarket, said that market-leading fixed-rate deals from Scottish Power and EDF Energy were removed around the time that SSE announced its price hikes in August, as people moved to snap them up.

But he said that some smaller brands such as Ovo Energy are still offering some competitive deals.

Mr Byrom suggested that customers who hunt for better deals may find that some energy companies introduce a few more competitive products to try and tempt customers away from British Gas, but they will need to be pro-active and keep a close eye on the market.

He said: "Overall, the message is to do something. Get off a standard tariff."

A survey published by Consumer Focus last month estimated that around six million households are planning to cut back on their heating this winter.

Nearly four out of 10 households (39%) are worried about affording their energy bills this winter, and 70% of those, plan to reduce their heating, the survey found.

The reasons

Utility providers blame rises in wholesale gas prices, Government policy, the cost of using the National Grid network and investment in infrastructure for their tariff hikes.

Here are some of the reasons blamed for higher household bills:

Wholesale gas prices

More than half of domestic bills and a quarter of business customers' bills are made up of wholesale energy costs, according to energy watchdog Ofgem.

Wholesale gas prices (the cost to the supplier) have risen in recent months due to a combination of tight supply and stronger demand. For example, in the winter more households put their heating on which means there is a greater demand on oil resources, and this pushes up prices. Infrastructure firms such as National Grid have warned that the domestic British suppliers are supplying less, increasing a reliance on pricier imports and storage withdrawals.

In addition, the price of wholesale gas is often related to the cost of oil. Ofgem estimates that the link between oil and gas prices is responsible for around 30% of changes in future gas prices. Oil prices are around 25% higher than they were in June.

But energy companies buy their wholesale gas well in advance so a rise in wholesale and retail prices may not necessarily run concurrently. British Gas previously said wholesale gas prices were 15% higher for this winter.

National Grid costs

The cost of using National Grid networks to distribute electricity and gas to customers' homes, which represent around 25% of a typical bill, is 9% higher than a year ago, according to supplier SSE. But this is being passed on to the consumer through rising bills and is expected to affect all companies.

Government policy

The cost of mandatory environmental and social initiatives that suppliers are required to fund and pass on to customers, like the Carbon Emissions Reduction Target and the Warm Homes Discount, are 30% higher than they were a year ago and now represent around 10% of a typical bill, again according to SSE. This is also expected to spread to other suppliers.

Investment in infrastructure

Energy suppliers are under pressure to invest in their infrastructure to prepare for future increases in demand. British Gas, for example, recently announced a £1.4 billion investment with GDF Suez to develop a major North Sea gas field off the coast of Norfolk.