BT to Scrap CPI-Linked Price Rises, Shift to Fixed Pounds & Pence Increases

BT has announced a significant change to how it increases prices for its mobile and broadband services: it will drop the inflation-linked model (currently the Consumer Price Index plus a fixed percentage) and switch to fixed, clear price rises in pounds and pence. The new model is expected to take effect in summer 2024.

Under the current scheme, BT's formula for price hikes is CPI + 3.9%, which means that every year when inflation is calculated, customer bills are increased by that inflation rate plus an extra percentage. BT says that although its contract terms allowed this, it recognises there has been confusion and frustration among customers, especially given the strain of rising living costs.

With the new approach, the increases will be stated in fixed sums. For example, some mobile customers may see rises of about £1.50 per month, while broadband customers could see increases around £3 per month. These numbers are preliminary and may vary depending on plan, service type, and contract.

BT Consumer CEO Marc Allera said that while price rises are never easy to discuss—especially during periods when households are feeling cost pressures—the company must balance rising operational costs, ongoing investments in network upgrades, and customer service improvements with fair, transparent pricing.

This move aligns with regulatory expectations in the UK. Ofcom has proposed moving away from inflation-linked pricing towards fixed sums to improve transparency and help consumers better understand how much their bills will increase. BT's pre-emptive shift suggests it believes these regulatory changes will be adopted.

The change won't eliminate mid-contract increases; BT confirms that existing commitments will be honoured and that some contracts will still see price rises—but those rises will be clearer and easier to understand. BT is aiming for clearer communication of price changes so customers know ahead what to expect, rather than surprises when inflation figures are published.