Your Mobile Phone Contract & Annual ‘Retail Price Index’ (RPI) Price Changes

September 30th, 2014

Some UK mobile networks will increase the price of your contract every year by RPI inflation. We look at the major UK networks and compare their policies on annual price rises.

In the UK, some mobile networks raise the price of Pay Monthly contracts for existing customers every year. Mid-contract price rises on EE and O2 are carried out every spring in line with RPI (the Retail Prices Index, a measure of inflation). In contrast, other networks have instead promised to keep a fixed monthly price throughout the length of your contract. Networks such as Tesco Mobile, Three and Vodafone won’t impose a mid-contract price rise.

Mobile Network Will prices increase during my contract?
EE Yes, prices rise by RPI (a fixed price option is available).
O2 Yes, prices rise by RPI (only the airtime plan increases on Refresh).
Tesco Mobile No, prices are fixed.
Three No, prices are fixed.
Vodafone No, prices are fixed.

In this article, we take an in-depth look at mid-contract price rises on UK mobile networks. We’ll explain the meaning of RPI inflation and we’ll discover how each individual network is able to change their prices mid-contract. We’ll also look at how you can minimise the effect of mid-contract price rises and how much difference they’re expected to actually make.

What is RPI Inflation?

10 Pound NoteIn the UK, some mobile networks have written into their contract that they’re able to increase prices every year in line with the Retail Prices Index (or RPI for short).

A measure of inflation, RPI is calculated by the Government’s Office of National Statistics. To come up with the figure, the Office of National Statistics will define a basket of goods and services which represents the consumption of an average UK resident. By tracking the price of that basket of goods & services, they’re able to measure general changes in the typical cost of living. If RPI inflation was measured to be 3%, a basket of goods and services that cost £100 last year would now cost you £103 on average.

The BBC News website has further information about how RPI inflation is measured in the UK. They also have historical measurements of RPI inflation over the past 14 years. As a typical ballpark figure, RPI inflation normally hovers around 3%. It can however swing quite wildly: it was as high as 5.6% in September 2011 and was as low as -1.4% in September 2009.

Customers on EE and O2 will see their prices changing by RPI every year.

Month RPI Inflation
March 2008 3.8%
September 2008 5.0%
March 2009 -0.4%
September 2009 -1.4%
March 2010 4.4%
September 2010 4.6%
March 2011 5.2%
September 2011 5.6%
March 2012 3.6%
September 2012 2.6%
March 2013 3.3%
September 2013 3.2%
March 2014 2.5%

RPI inflation generally hovers at around 3%.

Mid-Contract Price Rises: Policies By Network

EE

EECustomers on EE Pay Monthly will see the price of their contract automatically rising in March of each year. The rate of increase is determined by RPI inflation (that’s the Retail Prices Index as measured in February of each year).

To give an example, if your contract currently cost £38/month and if RPI inflation were to be 3% next February, you can expect to pay £39.14/month from next March onwards.

Details of the RPI increase can be found in section 7.1.4 of EE’s Pay Monthly terms and conditions:

7.1.4 Your Price Plan Charge and, if applicable, any Additional Commitment Service Charge includes an annual price increase, which will be the annual percentage increase in the Retail Price Index (RPI) published by the Office for National Statistics. We will give You 30 days Written Notice of the increase to take effect in March of each year and use the most recently published RPI figure before we give You Written Notice under this point 7.1.4.

Customers of Orange and T-Mobile are also subject to same price increase as customers on EE. Orange customers can refer to clause 4.3.1 of their terms & conditions. Customers on T-Mobile should instead see clause 7.2.1 of their network terms & conditions.

Tariff Information: EE Website

‘Fix Your Monthly Plan’ Option

If you’d like to fix the price of your plan, EE currently has an optional add-on where you can fix the monthly price of your contract. You’ll pay a little more every month (up to £2/month extra) but you’re able to avoid future price increases due to RPI. The cost of the add-on will depend on the cost of your current contract:

Monthly Price of Your Contract Additional Cost to ‘Fix Your Monthly Plan’
£14.99/month or less 50p/month
£15/month to £24.99/month £1.00/month
£25/month to £34.99/month £1.50/month
£35/month or more £2.00/month

For more information, see our article on the ‘Fix Your Monthly Plan’ add-on from EE. You can also see the help article on EE’s website.

O2

o2O2 customers will also see their prices rising in April of each year.

For customers on O2 Refresh, the airtime component of your plan will increase by RPI inflation every April. Meanwhile, the handset component remains totally fixed as it’s really a loan repayment (you’re simply paying back the cost of your phone). To give an example, you might have a £38/month contract with O2. The contract is split up into two separate parts: £20/month for the handset and £18/month for the airtime. Assuming RPI to be 3% next April, your monthly airtime plan will increase in price from £18 to £18.54. The handset plan remains fixed at £20/month so you’d pay a total of £38.54/month. Refresh plans are only available directly from O2.

For customers on a non-Refresh tariff (e.g. if you bought your handset via the Carphone Warehouse), the entirety of your plan will go up by RPI every April. If you were to have a £38/month O2 contract from the Carphone Warehouse and if RPI were to be 3% next April, your monthly cost would instead rise to £39.14/month.

O2 Refresh - Device and Airtime Plan

On O2 Refresh, only the airtime plan will increase with RPI. The device plan has a fixed monthly price.

For more information, the O2 website has further details about their RPI-linked annual price rises. You can also read section 5.2 of O2’s Pay Monthly terms and conditions:

5.2 From 2015, your Monthly Subscription Charges will be subject to an annual adjustment by the RPI Rate (which could increase or decrease), which will first appear on the April bill following the announcement of the RPI Rate (an “RPI Change”). We will publish on our Website the relevant RPI Rate as soon as it becomes available. If we do this more often and/or by more than the RPI Rate then you’ll have the right to end this Agreement under paragraph 5.4.

Tariff Information: O2 Website

Tesco Mobile

Tesco MobileTesco Mobile has a Tariff Promise on their website: they’ve made a commitment not to raise “customers’ core tariff prices [during] mid-contract”. The monthly price you pay at the start of the contract will be the exact same price you pay at the end.

The tariff promise doesn’t cover “non-core prices” so Tesco is still able to change out-of-allowance rates, roaming costs, premium-rate calling costs, etc.

Tariff Information: Tesco Mobile Website

Three

ThreeThree has made a commitment not to increase monthly tariff prices during the minimum term of your contract. According to a statement posted on their official blog:

Your fixed monthly recurring fee from Three will not go up in the minimum term of your contract. We support Ofcom’s approach to fixing the price for pay monthly contracts for their duration. We think it’s only fair that customers should have clarity around costs when they sign up to a contract.

Other networks such as EE and O2 are able to increase their prices in the minimum term as they mention the price rise in their terms and conditions.

Tariff Information: Three Website

Vodafone

vodafoneVodafone has made their Pay Monthly customers a ‘fixed price contract promise’: a commitment not to increase the monthly price of your contract during the minimum term. From the official Vodafone blog:

We’re being very clear to our customers that the price you pay for your bundle of minutes, texts and data each month won’t increase for the length of your Pay monthly agreement, as long as you stay within your allowance.

Tariff Information: Vodafone Website

More Information

For more information on RPI inflation, please see the BBC News website. For information about the tariffs on each network, please see the official website of EE, O2, Tesco Mobile, Three and Vodafone.

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About Ken

Ken Lo

My passion is helping people to get the most out of their mobile phone. I've been blogging at Ken's Tech Tips since 2005.

Aside from writing about mobile technology, my interests are in software development, digital marketing and physics. Outside of the blog, I work with numerous technology companies helping them to explain their product and helping them to market it to consumers. Please get in touch for more information.

Your Comments

We'd love to hear your thoughts and any questions you may have. So far, we've received 5 comments from readers. You can add your own comment here.

  1. SANJAYA said:

    Hi,
    Very useful info.
    If RPI is negative, will they reduce the price?

    1. Ken Lo
      Ken replied:

      Hi Sanjaya,
      I don’t believe mobile contract prices have ever come down due to negative RPI. The mobile networks are usually very carefully with their wording e.g. they “reserve the right” to apply a RPI correction. Hence, if RPI were negative, they don’t have to exercise that right and they’d be able to keep prices at the same level as before.
      Ken

  2. Richard said:

    I’ve just upgraded to a new phone on the 3 network, and they do now mention yearly increases in line with RPI.

  3. Simon Scott said:

    The thing that bothers me about this is, aren’t mobile phone services included in the RPI basket of goods, under 08.2/3? It must cause problems linking any of the prices in the RPI basket to RPI itself, surely?

    1. Ken Lo
      Ken replied:

      Hi Simon,
      I believe they are. Many other industries also link prices to RPI (e.g. the rail industry) but I don’t think there’s a circular cause-and-effect here. The mechanism will probably just dampen changes in the rate of RPI, if this is even a measurable effect.
      Ken

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