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Pay monthly

Why is RPI Increase allowed?

16: Advanced member

I have just been thinking about this as trying to work out the real reason for this?

So, why do they need to increase the Tariff by RPi?

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25 REPLIES 25
5: Helper

"The Retail Price Index (RPI) is one of the two main measures of consumer inflation produced by the United Kingdom's Office for National Statistics. The Retail Price Index (RPI) was introduced in the U.K. in 1947, and was made official in 1956."

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17: Community Champion

There are two answers.

 

1. To ensure that their revenue maintains its value over time as the relative buying power of a specific sum of money depreciates.

2. Because they can!

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13: Advanced Member

It's a massive scam isn't it. If you sign a contract, that should be the price you pay for the period of that contract, like fixed price energy deals. 

There's also the way it's calculated on the non discounted price, yet when you sign up they rarely mention the list price. The price you pay should be the price that any increase is based on.

BT lawyers argued that CPI was a better value to use because it suited them and would mean paying less into the pension pot, but they are quite happy to use RPI when it means more money for them.

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17: Community Champion

No it's not a scam but it is an un welcome practice and something I've never agreed with but the essential fact is that phone contracts have never been fixed orice but minimum price. 

 

Pesonally it never affects nme nuch as I have annual SIMO contracts and have found that over time by costs have gone down but the amount of data I receive has gone up significantly.

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16: Advanced member

Ok, here to to put the Car among the Pigeons.

 

My tariff has gone up by RPI. However they are still offering the same for upgrades or new customers.

So how can they justify the increase?

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17: Community Champion

I'm not sure there is a justification. It just is what it is. Tariffs are changing all of the time and the RPI increase is just a mechanism to increase their revenue. Ofcom did try and get rid of this unwelcome practice but failed as all of the networks added a clause to their T&Cs allowing them to do this. As customers we have agreed and it amazes me that every year around this time it becomes a big story in the press. We all know it happens. We all know it's coming. We have all agreed to it. 

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16: Advanced member

I understand and agree with the increase.

But not when they continue selling the same Tariff to New Customers.

That for me is if not illegal, but definitely immoral.

The fact that they offer it to New Customers they cannot claim that it is to counteract RPI cost.

 

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12: Established

I agree, while not illegal it is certainly immoral. To my mind a contract should be binding on both side for the duration. 

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17: Community Champion
The contract is binding age we have agreed to the increase. What they should be is fixed price. They should also reduce in price after the two years have elapsed. Or buy a phone and get a 12 month sim only contact.

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13: Advanced Member

It surprises me how not one of the main networks has come out against these charges, it has a whiff of collusion about it!

With the ability to get a PAC by just sending a text message soon, and hopefully end of minimum term notifications, maybe we'll see the networks try and instil some loyalty to stay, It's going to be a lot easier to move very soon.

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16: Advanced member

I contacted Customer Relations directly regarding this. I said that it is Legal what they are doing but immoral as they are not increasing the same Tariff for new customers.

The justification for RPI increase is to keep in line with the Value of Money, however they need to take account for the product is now a lot cheaper than what it was.

So got a call from Customer Relation. Agreed with what I had said but it is policy and they can't change it.

However, offered me a good deal to move from 8GB to 15GB for 42p increase (80p if excluding RPI increase). And contract date remains the same.

 

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17: Community Champion

Exactly the point I made. I just increased from 20GB to 40GB for a small monthly increase so the cost per GB has reduced significantly. The cost of data is falling while the cost of the handset is increasing very quickly. 

 

It's the reverse to the trend in computing where hardware has fallen but software costs have increased a lot.

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17: Community Champion

It would certainly make sense to upgrade if you're paying more than a new customer, although you'd be signing on for another 12 months rather than having the flexibility of a 30-day rolling contract.  If you have a device-inclusive contract, don't forget to switch to SIM-only, too, as soon as you can.  I think Vodafone now send a reminder about this, to be fair.

The use of RPI rather than CPI (which is generally reckoned to be a more accurate indicator of the rise in living costs) is definitely questionable.   It's not only businesses that use it, of course.  If the government is giving you money, it uses CPI.   If it's charigng you, it uses RPI, which is higher.

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16: Advanced member

I just did a Tariff change. Monthly price increased but discount increased as well. Initially I did offer to have contract end date changed to 12 months, but Agent said no need.
Forgot to add, I have been SIM only on the 8GB Tariff for almost 4 years now. The tariff has been coming down every year and the discount also reduced by 10% every year, Net monthly price dropped.
September 18 saw the greatest Value increase despite price drop as as Global Plus and 500 minutes to EU, on drop of £5.

Now paying exactly the same amount I did before September 18, with 7GB extra Data, Global Plus and 500 EU minutes.

And hence my question on how is RPI increase justified, when for the same amount of Money more is on Offer?

As  has mentioned, probably justified for pay monthly with phone, as you pay for it like Loan. However once paid, should automatically drop the price after 2 years.

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Moderator
Moderator

I'm sorry for any confusion around understanding the RPI increase @GetafixThe RPI figure published in March 2019 is 2.5% and is a widely recognised measure of the UK’s general level of inflation. This is used by many industries as a guide on whether to adjust prices and by how much. 

If you’re on a Pay monthly contract taken out on or after 5 May 2016 or a Mobile Broadband contract taken out on or after 28 September 2016 (including upgrades), you’ll see this change from your April bill, in line with your Ts&Cs

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17: Community Champion

I'm in a slightly weird position.   I was on a 250mb tarriff at £11 which was phased out and I was moved to a 500mb one, which was £15 at the time, but I got a discount, meaning I paid less than before.  That same tarriff is now £11 and the next price increase will move what I'm paying above that, so it'll be worth "upgrading " to exactly the same tarriff as I'm on now .

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Moderator
Moderator

@hrym I appreciate your situation and the prices being different. Our price plans are constantly changing, which includes the amount of data available and the cost. I believe it's always worth upgrading or at least double checking you're getting the best value for money.

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16: Advanced member
I understand the RPI increase and agree that it is according to T&Cs.
However what is the reason for increasing the Tariff?
And the increase could be whatever you as company decide, ie RPI, CPI or say a Fixed %, as long as mentioned in T&Cs.
But whichever is used, why does it need to be increased?
 
 
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Moderator

@Getafix As we use RPI this may be a question more for the Office for National Statistics as I wouldn't be able to give a full answer as to why their figures change. 

As @Loz has mentioned, it's used by a number of different industries and the Office themselves recognise and understand the figure they publish will affect contracts such as ours. When using the data they publish, it helps us to see whether our prices should be adjusted. Should the RPI figure decrease, this won't increase your plan but will remain the same.

I do appreciate where you're coming from though and understand the curiosity behind it.

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