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Inflation-linked price rises: Ofcom proposes shutting the stable door

13 December 2023
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Ofcom’s plan to ban inflation-linked price rises creates a headache for most operators, but the financial hit will not be felt for years, if then (depending on their replacement).

Ofcom is correct in pointing out some of the drawbacks of the practice, but it will likely be replaced by an alternative tactic that may well end up being worse for consumers.

The unintended consequences could be significant, with a period of uncertainty for operators, low-end plans less appealing to offer, and poor signaling to investors in the sector.

Related reports

UK telecoms price increases: Not as good/bad as they seem

31 March 2023

Headline inflation-busting price increases of 14% mask effective increases averaging a sub-inflation 8%, due to their limited scope across the customer base and over time.

The high headline increases have led to attacks from political and consumer groups, we would argue unfairly, and may yet drive reputational damage.

Looking forward, inflationary increases may be banned, but we would expect higher fixed increases to replace them, and micro-regulating pricing structures does tend to result in unintended consequences.

Access report

  • UK telecoms price increases: Not as good/bad as they seem

    31 March 2023

    Headline inflation-busting price increases of 14% mask effective increases averaging a sub-inflation 8%, due to their limited scope across the customer base and over time.

    The high headline increases have led to attacks from political and consumer groups, we would argue unfairly, and may yet drive reputational damage.

    Looking forward, inflationary increases may be banned, but we would expect higher fixed increases to replace them, and micro-regulating pricing structures does tend to result in unintended consequences.

    Access report