Vodafone has axed inflation-based mid-contract price rises ahead of new rules set to be introduced by Ofcom.
The new policy will be introduced from July 2, 2024, and the telecoms company will inform customers upfront about the exact cost of their contracts in pounds and pence, including when price rises will occur. It's important to note that Vodafone has axed inflation-based contract rises - this means prices will still be increased but customers will be informed exactly how much and when they will rise.
The change won't be widespread initially as it will only affect new customers and those renewing a contract after this date. For example, customers taking out a contract in August 2024 will see their bill adjusted in April 2025, and then in April 2026, by a predetermined set amount.
Vodafone said plans will increase from £1 a month on mobile and £3 a month for broadband customers. Vodafone confirmed that no price rises will be applied to customers identified as financially vulnerable or those on social tariffs such as its "Vodafone Essentials" tariff. The change won't affect pay-as-you-go users as they aren't signed up to a fixed contract.
The change comes in response to the telecoms regulator Ofcom's consultation that emphasised the need for transparency in mid-contract price increases. Under current rules, broadband and mobile companies are allowed to increase prices mid-contract in line with inflation, plus up to 3.9% extra on top of this. Most use Consumer Prices Index (CPI) inflation data for December, or Retail Prices Index (RPI) for January to decide their increases - this year's hikes sat between 7.9% and 8.8%.
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Due to high inflation over the last two years, customers have faced major increases in their bills compared to other years with customers seeing hikes of up to 17.3% last year. In January BT also abandoned its inflation-linked mid-contract price rises with the change being introduced from April. From March 2025, BT Mobile customers will see mid-contract price rises "from £1.50", while broadband customers will face rises of £3. The new policy will apply to new and existing customers who take out new contracts or renew after April 10 this year. Ofcom has not announced a widespread ban on the policy but is currently looking into it.
Ernest Doku, telecoms expert at Uswitch.com said Vodafone's decision to apply the mid-contract charges still means there will be "winners and losers". They said: "Those on cheaper plans will see their contracts increase by a greater percentage, relative to their initial outgoings. For example, broadband customers on Vodafone’s Full Fibre 74 tariff which costs £312 a year will see an annual price increase of 11.5% whereas those on Vodafone’s Full Fibre 910 tariff at a cost of £504 a year will see an annual increase of 7%.
“The change also excludes existing customers and out-of-contract customers, who will still be subject to inflation-linked and percentage-based price hikes come next year. As always, it pays to know where you stand with your mobile and broadband contracts. If you are signing-up to a new contract, carefully review the terms, whether any mid-contract price rises will apply and see if you can save money by switching to a better deal”.
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