By Jonathan Davies

British Gas has announced it will cut household gas prices by 5%.

The move will reduce annual bills on average by £37.

British Gas said the cut, which will come into effect on 27 February, reflects the fall in wholesale costs of gas.

"We've been watching the significant moves in the international energy market extremely closely for some time, with the aim of helping customers with a price cut at the earliest possible opportunity," said Iain Conn, chief executive of Centrica, which owns British Gas.

"Operating in such a volatile market, no pricing decision is straightforward."

It follows a decision announced by E.On last week to cut prices by 3.5%.

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