Ofcom cracks down on inflation linked pricing

UK regulator Ofcom mandates upfront price transparency, shifting inflation risk from consumers to telecom providers.

Heath Gibson · Executive Manager – Industry Intelligence and Insights at NBN Australia26 July 2024Period: July 20244 min read

Last updated 6 May 2026

3.9%→

Standard annual price increase above inflation used by BT (2020)

1%→

UK inflation rate during the 2020 pandemic period

Locked

Companies covered:

Abstract

This report examines the UK telecom regulator Ofcom's recent decision to prohibit inflation-linked retail pricing. Historically, UK telcos like BT utilized 'inflation-plus' models, which led to double-digit price hikes by 2022 as inflation surged. The new rules, effective January 2025, require all mid-contract price increases to be clearly stated in pounds and pence at the point of sale. The brief also analyzes the implications for the Australian and New Zealand markets, where regulators are monitoring these international policy shifts.

Key Takeaways

Ofcom has banned inflation-linked and percentage-based mid-contract price rises to improve consumer price transparency.
Providers must now declare the exact size of any future price rises in pounds and pence at the time of sale.
The new regulatory requirements for UK telecom contracts take full effect on 17 January 2025.

Create a free account to keep reading

stakeholder implications · PDF download

Frequently Asked Questions

Regulators are addressing the lack of transparency in 'inflation-plus' models that triggered double-digit price hikes by 2022. The new mandate requires all future increases to be expressed in pounds and pence at the point of sale to eliminate consumer uncertainty.

The regulatory requirements take full effect on 17 January 2025. From this date, providers must abandon percentage-based escalators, such as the 3.9% annual increase above inflation previously utilized by BT.

Anticipating similar scrutiny, Telstra preemptively abandoned CPI-linked pricing in May 2024. This shift allows operators to set prices above the inflation rate while assuming the financial forecasting risk previously borne by consumers.

While retail prices are not yet restricted, wholesale fixed broadband remains pegged to inflation by regulation. This creates a potential margin squeeze if retail pricing follows the UK's move toward fixed-sum increases while wholesale costs remain volatile.

Ofcom cracks down on inflation linked pricing

UK regulator Ofcom mandates upfront price transparency, shifting inflation risk from consumers to telecom providers.

Heath Gibson · Executive Manager – Industry Intelligence and Insights at NBN Australia26 July 2024Period: July 20244 min read

Last updated 6 May 2026

Abstract

Key Takeaways

Ofcom has banned inflation-linked and percentage-based mid-contract price rises to improve consumer price transparency.

Providers must now declare the exact size of any future price rises in pounds and pence at the time of sale.

The new regulatory requirements for UK telecom contracts take full effect on 17 January 2025.

Frequently Asked Questions

Abstract

Key Takeaways

Frequently Asked Questions

Unlock the full report

Free

Lite

Team

Abstract

Key Takeaways

Frequently Asked Questions

Unlock the full report

Free

Lite

Team