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BT raises prices by £42 amid cost of living crisis

A file photograph shows a man looking towards the BT Telecom Tower, from Primrose Hill in London, Britain, December 29, 2015.  Britain's BT should be forced to spin off its national broadband network to improve speeds and quality of service, an independent report backed by more than 100 lawmakers said on January 23, 2016. REUTERS/Peter Nicholls/Files
BT said price hikes are "sometimes a necessary part of business". Photo:Peter Nicholls/Reuters

BT (BT-A.L) will raise broadband and telephone prices by more than 9% in a further blow to millions of households.

The telecoms giant said the 9.3% increase means most of its 14 million customers will pay an extra £3.50 a month, or £42 annually, on average for phone and broadband bills from the end of March.

Nick Lane, BT’s managing director for consumer services, said price rises were "sometimes a necessary part of business, if we're to keep up with the rising costs we face and ensure we can continue to deliver a brilliant network experience".

Financially vulnerable households and certain packages, like BT Home Essentials and BT Basic, will be exempt.

The BT share price has been soaring in recent months and is up around 40% since the end of October last year. Chart: Yahoo Finance UK
The BT share price has been soaring in recent months and is up around 40% since the end of October last year. Chart: Yahoo Finance UK

Read more: What higher inflation means for savers and investors

The move comes after figures from the Office for National Statistics (ONS) show that inflation has jumped to the highest level in 30 years, reaching 5.4%.

The major providers, including, EE, Plusnet and Vodafone are expected to follow as they all increase their broadband prices by the inflation rate plus 3.9%.

TalkTalk adds inflation and an additional 3.7%. The 9.1% rise amounts to around £2 extra each month.

Virgin Media was the first provider to announce a price rise, with customers set to see their plan rise by £4.70 a month or £56.40 a year from March 1. Households on a fixed-price promotion will only see a price hike after the end of their contract.

Read more: UK inflation hits 30-year high as cost of living squeeze looms

BT said working from home, online education and increased TV streaming have increased demands on the company’s network, with a 90% rise in broadband usage since 2018, and a 79% increase on mobile phones since 2019.

Households are already facing a significant pressure with the cost of other utilities also set to increase. Energy customers are facing the prospect of a 50% increase in their gas bills from April.

“Continued rising inflation will put pressure on both consumer spending and confidence over the coming months. Rising household costs will also prompt some consumers to tighten purse strings, at a time when 72% of UK consumers are already concerned that prices for everyday purchases will go up,” Oliver Vernon-Harcourt, head of retail at Deloitte, said.

Watch: What is inflation and why is it important?