Mobile phone customers face steep price hikes this spring

(Splash)

A sharp rise in mobile phone bills over the next two months is expected to worsen as network providers raise prices for existing customers.

Virgin Mobile and O2 customers will see their bills rise by 11.7%, while other network providers such as EE, Vodafone, Three, Plusnet, iD Mobile and BT Mobile are also expected to raise prices.

A spokesperson for O2 said: “We recognize that price changes are never welcome and always balance keeping our prices competitive with the need to continue to invest in services.”

Why are mobile phone companies raising their prices?

Most network providers reserve the right to increase their prices during the contract and increase prices once a year, usually in March or April.

They determine the size of the increase by adding to your bill an amount between 3.9% and 4.5%, plus the rate of inflation in January. For the inflation figure, they use either the consumer price index (CPI), which was 5.5% in January, or the retail price index (RPI), which was 7, 8%.

The CPI measures the average increase in the cost of consumer goods and services such as food and transportation. The RPI includes costs not tracked by the CPI, such as the TV license and mortgage interest payments.

How do companies raise their prices?

The rate of increase for each network provider will depend on the index they choose and the percentage they add on top:

  • BT, EE, Plusnet and Vodafone raise CPI prices plus 3.9%

  • Virgin Mobile and O2 base their new prices on RPI plus 3.9%

  • Three raises CPI prices plus 4.5%.

Tesco Mobile is the only network provider that does not raise its prices every year.

Sky also does not carry out planned annual increases. However, it reserves the right to increase its costs. Customers can cancel their Sky contract without penalty if they want to avoid paying more.

How to get a better mobile network deal

Customers on a rolling month contract can end their contract shortly after the increase, at the end of April.

Other customers may have to pay a penalty to terminate their contract early. This will be indicated in fine print.

You can compare offers using a cell phone comparison tool like ES Money.

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