What is CPI? The figure linked to broadband, TV and…

What is CPI? The figure linked to broadband, TV and mobile price hikes in April

Households struggling with the cost of living crisis could soon see further strain on their bills as prices look set to rise in April. TV, broadband and phone providers have announced their intention to raise bills within months.

Recently, it was revealed that Sky offshoot Now TV will be increasing its prices for subscribers of its sports package from next month. This comes after most major internet service providers, including BT, Virgin and EE, confirmed record-breaking price hikes.

One of the reasons behind the price changes is the Consumer Price Index (CPI). This is a measure of the average prices of everyday goods and services.

What is the CPI?

The CPI stands for the Consumer Price Index. It’s a way of measuring the change in consumer prices based on a representative basket of goods and services.

The basket of good changes depending on the average spending habits, for example, the most recent change included sports bras, pet collars and meat-free sausages. This basket is then used to calculate inflation, the rate at which prices increase.

Many companies, in particular mobile phone, broadband and TV providers, then use the CPI to alter their own prices in annual increases. These usually come in April at the beginning of the financial year.

BT, EE, Plusnet and Vodafone broadband contracts all rise in line with CPI plus 3,9%, resulting in annual increases each April. Sky contracts allow similar increases but do not specify whether this is in line with CPI or not, while Virgin Media recently revealed that their price increases will be based on RPI (Retail Price Index), which is typically higher than CPI.

Earlier this month, BT revealed that they would be increasing prices by 14.4% in line with the December 2022 CPI rate. A BT Consumer spokesman said: “We expect the average customer will see their price rise around £1 per week.

“This price rise doesn’t apply to all our customers [and] over three million customers… will have their prices frozen through 2023. Although telecoms bills remain a small fraction of total average household spend, we know that everything adds up.

“We take seriously our responsibility to ensure our services are accessible to the widest group of customers possible through our market-leading social tariffs. We are balancing our own rising costs due to high inflation and making vital digital infrastructure investments for the UK.”