Mid-contract mobile phone price increase warning - the providers that could hike bills up to 18% in 2023 revealed

There's a mobile phone price increase warning as some networks use the rate of inflation when setting mid-contract price rises and could hike bills by up to 18% from next April.

Millions of us shop around for the best mobile deal and are frustrated to find the price shoots up mid-contract after signing on the dotted line.  

Here we reveal the mobile providers with inflation-busting mid-contract price hikes built into contracts, and what you can do if you’re affected.

Mid-contract mobile phone price increase warning

Which providers are making mid-contract price increases?

Confusingly, some providers including O2 and Virgin Mobile have previously used the older, and higher, Retail Price Index (RPI) rate of inflation when factoring in price rises – while others use the lower Consumer Prices Index (CPI) rate.

The table below gives you an idea of the mid-term price rises different providers charged based on last year’s inflation rates versus possible hikes in 2023 using current inflation figures.

Source Which?

* Sky Mobile does not currently raise prices mid-contract but offers no guarantee
**Three customers who join or upgrade from 1st November 22, existing customers have prices increased by 4.5% each April, not linked to inflation.

Three is the latest provider to link price hikes to inflation.   

It had previously raised contract prices by 4.5% each year – regardless of the rate of inflation – but its new terms and conditions will factor in the inflation rate.  

It will affect customers who joined or upgraded on - or after 1 November 2022.

Three told its customers that, “each April, your monthly charge will increase by an amount up to the December CPI Rate -  published in January of that year -  plus 3.9%”.

It is important to note these providers could decide not to pass on these increases, but the hikes are agreed to in customer contracts.

Can mobile providers change contract prices mid-term?

Telecoms regulator, Ofcom says providers are following the rules if the price rises are clearly set out in their contract and not just “included in the small print”.

Catherine Hiley, telecoms expert at Uswitch.com said: “The majority of mobile network and broadband providers use the rate of inflation to work out their mid-contract price rises”.

“The Consumer Prices Index (CPI) is the most common measure, but some mobile providers choose to use the Retail Price Index (RPI)”.

RPI is the higher of the two inflation rates and is currently 14.2%.  It includes mortgage interest payments whereas the lower CPI inflation rate – currently 11.1% - doesn’t include mortgage interest and is based on the cost of goods and services.  

Some mobile providers may even add a premium beyond inflation.

“Most include an additional percentage increase of around 3-4% on top, which is often justified as a contribution to investment in infrastructure and to make service improvements”, says Catherine Hiley.

What can I do to avoid the mid-term price hikes?

The most important thing is to check your existing contract to make sure  you’re aware of any potential price rises and always check the terms and conditions before switching.

Ofcom says that “if your provider puts your monthly price up by more than this amount, you have 30 days to walk away from your contract penalty-free”.

If providers don’t detail any price rises in your contract – then in this case you have 30 days to exit any existing contract.

Switch providers to get a cheaper deal

If your provider did detail any intended price rises in the contract, you might have to stick out your contract before switching.  

But if it didn’t do this or tries and charges more than any specified rate you can give 30 days' notice while you shop around and find a better deal – along with a provider that won’t peg price rises to inflation.

Another reason to switch providers is that sticking with the same one -  once you’re out of contract means you’re paying several times over for your handset.  And depending on the calculations they use for price rises this too could boost your annual bills.

If you do want to stick with your provider the chances are you’ll be able to haggle down the price of your contract. You might still face mid-term price hikes depending on your provider, but if you’ve bagged a cheaper or discounted deal these may seem more affordable.

Look for a social tariff

If you really do struggle to cope with any mid-term price hikes in your mobile contract, speak to your provider.

Some companies including both EE and Vodafone have social tariffs that can save you money if you’re claiming certain benefits or on a low income.  

Social tariffs are something broadband companies also offer customers in this situation.

Buy a handset and cheap Sim deal

You may be able to switch and save money with a Sim-only deal.  

This means instead of taking out a contract deal for your next phone – you could look to buy the handset along with a cheap monthly Sim deal.

“Consumers looking to take out a SIM-only deal, but who want a newer handset, should consider buying a refurbished device. 

You can save hundreds of pounds by going nearly new — and it’s likely you won’t notice any difference to the quality or condition of the phone”, says Catherine Hiley.

These deals usually work on a rolling 30-day contract so if you spot a better offer and want to switch – you’re not locked into a long-term contract and usually only need to give one month’s notice.

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