BT is abandoning mid-contract price rises linked to inflation after the telecoms watchdog Ofcom threatened to ban the practice.

It has been one of several providers to tell customers the cost of their mobile and broadband services would increase by inflation plus a fixed percentage.

But the regulator said that was confusing and price rises should be spelt out in "in pounds and pence."

BT has announced it will introduce that change from summer 2024.

According to a blog post from BT consumer chief Marc Allera, that means mobile customers will see mid-contract price rises "from £1.50", while broadband customers will face rises of £3.

"We are continually thinking about how we – and the wider industry – can play our part alongside policymakers to drive meaningful change, at a time when we can see so many people under pressure," said Mr Allera.

"In real terms, people pay less for their connectivity now than they ever did and get much more", he added.

The problem has been exacerbated in recent years because inflation – the overall rate at which prices are rising across the economy – has been much more pronounced.

The big increases in the cost of living in 2022 and 2023 have pushed up prices by more than in previous years, and resulted in big changes in the middle of deals.

For example, BT put up prices by 14.4% in March 2023.

Ofcom said at the time that four in 10 broadband customers and about 36 million mobile customers were on contracts subject to inflation-linked price rises.

It has yet to publish its final decision on its proposals to ban the practice altogether.

"This is a smart move from BT, anticipating the likely ban on inflation-linked pricing after Ofcom opened a consultation into the controversial practice late last year," said Kester Mann, from analysis firm CCS Insight.

Mr Mann pointed out that BT's announcement comes less than 24 hours before many UK operators confirm their annual price increases for 2024.

"This is a delicate topic as households continue to grapple with cost-of-living concerns," he added. "The ball is now in the court of the UK's other operators, some of which will probably quickly follow BT's lead."