Millions of Vodafone customers in the UK will see their bills rise by 2.5% next month, after an announcement from the mobile and broadband provider.
The 2.5% price rise will affect any Vodafone customers who are on pay-monthly mobile or mobile broadband contracts. Anyone on a pay-monthly mobile contract taken out on 5 May 2016 or after will be hit with the price rise. Similarly, anyone on a mobile broadband contract taken out on 28 September 2016 or after will be affected. Any customers who took out their contract on 5 February 2019 or after, either new or existing customers, will be exempt from the price rise.
The hikes will come into effect on April 1 and are in line with the latest Retail Price Index figure. The telecoms giant determines their annual price increases on February’s RPI each year, and this year’s rise is less than the 3.6% announced last year.
The news comes after the other major mobile networks in the UK had announced similar price increases. O2 and Three UK are both increasing their prices by 2.5%, while EE customers will see a slightly higher increase of 2.7%.
The hikes announced by Vodafone mean customers on their cheapest contract of £19 a month will pay an extra £5.70 each year. On the other end of the scale, any customers on their most expensive contract of £58 a month will pay an extra £17.40 on their mobile bills each year.
“We can confirm that from April our charges for pay monthly contracts will increase by February’s Retail Price Index of 2.5%,” said a spokesperson for Vodafone. “This will apply to contracts taken out on or after 5 May 2016. Customers will be notified over the next few days and further information can be found online.”
According to global pricing specialists Tarifica, price increases on consumers’ mobile bills will cost them a total of £173 million this year.
“We estimate that since 2013 once the latest set of price increases have been taken into account, these inflation-based price increases will cost the UK’s mobile consumers in excess of £1.1 billion,” said William Watts, director at Tarifica. “When calculating the cost to consumers, the most important factor to consider is that price escalations are applied every month until the contract has run its course.
“So, while many operators advertise the fact that these changes are only costing customers ‘between £1 and £2 per month,’ the cost over the life of a contract can approach £50 or more in some cases. Further, these escalations are stacked on top of each other year on year, meaning that the following year’s price increase is built off the one from the previous year, similar to compounding interest in a savings account.”
Customers have been urged to switch providers if they are able to do so. Any Vodafone customers who are mid-contract, however, will likely have to pay an exit fee. But anyone who is at the end of their minimum contract term could save money by comparing deals and switching.