Retail Price Index (RPI) / Consumer Price Index (CPI) Increases - What are they, when are they, and how are you affected?

EDITOR 3
Posted 13th Dec 2019
You may have seen RPI / CPI mentioned on quite a few threads here at hotukdeals, especially on services and contract deals.

Ofcom (the UK’s regulator for telecommunication services) legislated in January 2014 to protect consumers against “unexpected mid-contract price rises”. At the time, many people had expected this to mean the end of mid-contract price rises on mobile phone contracts. However, the legislation unfortunately kept the door open for price rises happening providing the mobile networks detail this inside their contract. This came in the form of RPI / CPI.

In October 2018, Ofcom made it a legal obligation for all mobile networks to offer a spend cap on their contracts. This spend cap only applies to out-of-allowance charges and does not prevent the cost of your core monthly plan going up.



Firstly, what is RPI / CPI?

Retail Price Index (RPI) is a measure of inflation published monthly by the Office for National Statistics. It's based on average price increases across the country over the last 12 months, and lots of industries and businesses use it to decide if they need to adjust prices. In the last few years, it has been heavily adopted in Mobile and Broadband contracts, which i'll cover in the thread below.

Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.



OK, so when is the RPI / CPI?

As the RPI / CPI is released monthly, it is up to the providers on when they enforce the changes and raise prices for customers based on the monthly Index, so it isn't the same for every provider. This is considered a blessing in disguise, as it helps distribute the increases over the 12 month period, ensuring customers aren't impacted by multiple changes all at once.



How am I affected by this?

This is wholly dependant on what services / provider you use, but i'll try to cover the main ones below

BT

CPI inflation (Consumer Prices Index). The price increase will take effect from March each year.

If you joined BT before the 11th January 2019 and have not upgraded your price plan since that date, the annual CPI price increase will not apply to you. On BT, all of your discounts are taken into consideration when calculating the CPI increase.

EE

On every EE contract the monthly price plan charge will be increased by RPI annually in March. The price increase will be based on your monthly price plan charge excluding any discounts. Other prices, such as call charges and Roaming costs, may also go up during your plan.


iD Mobile

If you’ve upgraded or purchased a new 24-month plan with iD on or after 15 June 2017, your monthly line rental charge will be adjusted in line with the RPI rate of inflation each year. Your out-of-bundle charges won’t be affected though. They’re safe.

The RPI is announced in February, and your bill is adjusted two months later in April.

o2

Each year, your Pay Monthly airtime tariff will be adjusted according to the Retail Price Index (RPI) rate of inflation. This rate is announced in February and your bill will be adjusted by this amount in April.

From April 2018 onwards, as well as changes to your monthly airtime bill, we also increased charges for calls outside your monthly allowance (not applicable to business customers). Charges for international calls and other additional services were also changed – unless you have a business tariff or mobile broadband tariff.

If you have an O2 Refresh plan, it will be split into two parts. Only the airtime part of your tariff is subject to an RPI price increase

Plusnet

All our mobile plans will go up in price every March, as described in this guide, unless you:

  • have a rolling monthly SIM only plan with us (if you’ve got a SIM only plan that has or had a minimum term, it’ll still go up each March)
  • have a mobile phone plan, or SIM-only plan which had or has a minimum term that you signed up for before 29 November 2016 and you haven’t changed your plan since then (that includes things like upgrading your mobile phone, agreeing a new minimum term or changing your plan on or after that date)


Sky Mobile

Sky reserve the right to change their prices at any time, but when they do, customers are given the opportunity to exit their contract with no early termination charge

Prices may increase and services may vary, including during your minimum term. If we increase your monthly subscription price you may cancel your subscription without early termination charge. Other prices and services may also vary. We will let you know about any material changes before we make them. Details of call rates and optional charges can be found on sky.com.

Tesco Mobile

Tesco Mobile are one of the last providers to not impose increases mid contract.

'When you join Tesco Mobile on pay monthly, we promise you that we’ll never raise your tariff price during your contract.

Never have, never will.

Every little helps.'

Three

If you’ve taken out a Pay Monthly handset plan since the 29th May 2015 or a Pay Monthly SIM card from Three since the 13th December 2018, it will be subject to an annual RPI price increase.

If you choose a monthly Advanced Plan Package, your contract with us includes the right to increase your Monthly Charge (within your Minimum Term) on an annual basis each May, by an amount up to the January Retail Price Index (‘RPI’) rate. This means that each May, your Monthly Charge will increase by an amount up to the January RPI rate (published each February) unless you agreed to a new SIM Only plan before 13th December 2018, in which case your monthly charge will stay the same. If the January RPI rate is negative, there will be no change to your Monthly Charge in the relevant year.

Virgin Mobile

Each July your airtime plan will increase by the Retail Price Index (RPI) rate of inflation announced in April of that year. We’ll give you 30 days’ notice of the exact increase.

Vodafone

All new Pay monthly contracts taken out on or after 5 May 2016, and Mobile Broadband contracts taken out on or after 28 September 2016 (including upgrades), have an annual price adjustment in line with the Retail Price Index (RPI).

For consumer contracts, we use the RPI figure published by the Office for National Statistics in March and apply the change in April each year.



Hopefully the above has helped you understand this change a little bit better, and give you a better expectation of any changes within your contract.

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3 Comments
"unfortunately kept the door open" ... their donors demanded it.
RPI is also higher than CPI and is seen as an imperfect measure because it includes items like mortgage payments which not everyone pays. CPI is seen as a better reflection of consumption; even the Bank of England recommends it.

But for obvious reasons, companies prefer to raise prices using RPI but raise wages using CPI. In August, the unions warned that raising fares would be a bad idea and should be linked to the CPI but then insist that railway employees should get a raise based on the RPI.
bozo00713/12/2019 19:20

RPI is also higher than CPI and is seen as an imperfect measure because it …RPI is also higher than CPI and is seen as an imperfect measure because it includes items like mortgage payments which not everyone pays. CPI is seen as a better reflection of consumption; even the Bank of England recommends it.But for obvious reasons, companies prefer to raise prices using RPI but raise wages using CPI. In August, the unions warned that raising fares would be a bad idea and should be linked to the CPI but then insist that railway employees should get a raise based on the RPI.


So whats good for the goose is not good for the gander
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