O2 and Virgin Mobile pay monthly customers face a price rise of over 10% this April following this morning’s inflation announcement by the Office for National Statistics (ONS).
Many telecoms and pay TV providers confirmed price rises last month, in line with January’s inflation figures. But O2 and Virgin Mobile’s annual price rise is linked to February’s inflation announcement. Both providers peg their annual rise to the Retail Price Index (RPI) rate of inflation, instead of the more common CPI rate.
This morning, the ONS confirmed the RPI rate as 7.8%. O2 and Virgin Mobile’s price rise formula for all new contracts is RPI+3.9%. As a result, the total price rise is 11.7%.
It’s the biggest ever single annual price rise from either company; a result of changes to the way annual price rises are calculated made when inflation was low.
Just a few years ago, most providers linked annual rises to inflation. But when inflation dropped below 1% in 2020, most providers adopted a formula to guarantee a price rise even if inflation was near 0%. The majority settled for an additional rise of 3.9% on top of inflation.
Virgin Mobile’s price rises are calculated differently to the rest of Virgin Media – which separately confirmed price rises for cable TV and broadband customers last month.
Sky is yet to confirm the level of this year’s price rises. BT, EE, Plusnet and Vodafone’s annual price rises were confirmed last month. Three has a fixed price rise of 4.5%, unlinked to any rate of inflation.