Royal Mail Stamp Price Rises Take Effect

Price rises for first class and second class stamps have taken effect after weeks of stockpiling by customers.

As the cost of a second class stamp rises to 50p, instead of 36p, and a first class stamp to 60p, up from 46p, the Royal Mail insisted the move was necessary and that they are still the cheapest postal service in Europe.

Post offices reported cases of bulk-buying of stamps after the price rise was announced a month ago.

Chief executive Moya Greene said the new prices were "incredible value for money", and argued that despite the rise, a first class stamp would still be in the bottom half of most prices in other European countries, and around half the cost of posting letters in France and Germany.

The decision followed a ruling by the communications watchdog Ofcom to allow Royal Mail to charge what it likes for stamps as part of a range of measures to safeguard the UK's universal postal service.

A Royal Mail spokesman said: "Raising prices is never easy, it is not a decision we have taken lightly but regretfully we have had no choice but to do."

"Royal Mail has made a loss in its core mail business, including packets, of almost £1bn over the last four financial years, that is not a sustainable position for any business."

However, Ofcom has said it is planning to cap what Royal Mail can charge to send large letters and small parcels second class, to help protect vulnerable consumers and small businesses from price increases.

Research by software provider Sage, showed that 51% of small and medium sized businesses send business correspondence through the post every day, with a further 26% of entrepreneurs using the service at least once a week.

It also found that businesses which send 10 invoices each day by first-class post, will be paying an additional £338 per annum compared to last year because of the price hike.

Lee Perkins, Managing Director for Sage UK Small Business Division, said: "By increasing prices at a time when small business finances are under extensive pressure the company is forcing owners to examine their back room functions and really question whether items have to be sent by post.

"The Royal Mail has shot itself in the foot by not fully considering the financial pressures both consumers and businesses are under."

Royal Mail delivers around 59 million items a day.

But deliveries have been declining by around 5% per year, even as internet shopping drives growth in packet delivery services.

Adam Scorer, director of policy and external affairs at Consumer Focus, said: "The economics of Royal Mail meant that something had to give to keep the six-day delivery universal service obligation.

"Consumers will have to pay more to put Royal Mail on a more sustainable footing, but the onus shouldn't be all on consumers."