Annual price increases greater than inflation rate

[Devon-Grumpy]

A recent email from O2 says that my annual charge will be increasing every April. I understand that this might be necessary, even though the cost of providing phone services seems to falling every year. However it is not just increasing by the rate of inflation (measured by the RPI), which I would accept, but by an additional 3.9% over the RPI, leading to an increase in real terms year on year. I find it hard to see how this is justified. Do others think this reasonable?

[Oxonian]

@Devon-Grumpy 

You have said :-

"....even though the cost of providing phone services seems to falling every year".

I don't think that you could possibly know that and what I think that you meant to say is that the cost of procuring 'phone services reduces annually. In fact, from the network's viewpoint, investment in 5G, new masts, filling gaps caused by the 3G switch-off and the like, is huge.

The price rises are transparent and, to that extent, I believe that they are fair. You are still getting far more for your money than you were twenty or thirty years ago. I also understand that UK prices compare favourably with those in overseas locations. I believe that there are many items in say Tesco that have increased in price by more than RPI plus 3.9 per cent in the last year, but because Tesco don't announce price increases in that way, they are not as easily noticed. 

Every UK mobile network has a similar annual increase to O2 ; your options are to move networks or do without a mobile altogether. 👍          

[Edit at 13.44 to remove a typographical error]

[Enlli]

Try EE. They are proposing rises starting at £1.50 next year. If you are a low volume user on one of the cheaper tariffs that's likely to be for them a much steeper rise than the old system.

[gmarkj]

From memory Tesco Mobile were saying no price increases in contract if you had a clubcard...