Royal Mail increases price of stamps

Royal Mail will raise the price of a First class stamp by 5p to 46p, as a part of a wide-range of postal service price increases in the UK. The operator also announced that Second Class stamps will rise 4p to 36p, whilst the cost of a large letter stamp will rise by 9p to 75p for First Class items and 7p to 58p for Second Class mail,

Stamp price rises will take effect from 4 April 2011, the company announced.

Today’s announcement follows Postcomm’s decisions, published on 8 November, when the regulator said Royal Mail could increase the price of stamped mail services by 10% on average and individual stamped mail services by up to 13%.

The overall increase to stamped mail prices will add around 7p to the average UK household’s weekly spend of around 60p on postage.

There will also be an increase in prices for franked mail, by 3p to 39p for standard First Class items, and by 3p to 28p for Second Class Mail. This is the first increase for two years on franked mail following a price freeze last year.

Moya Greene, Royal Mail’s CEO, said: “We have thought carefully about these increases as we are conscious of the difficult economic circumstances our customers are facing.

“No-one likes to pay more and we regret having had to take these tough decisions on pricing. After these increases, we will continue providing value-for-money as our prices will still be among the lowest in Europe.

“We are investing heavily to modernise our operations, which is all about providing our customers with the services they need in today’s open, highly competitive postal marketplace.

“With the sharp declines in mail volume, our revenues are falling. That means if we don’t generate more income, we will simply not be able to keep funding our six-days-a-week collection, sorting, transport and delivery operation to the UK’s 28m homes and businesses.”

Royal Mail said it has very significant fixed costs as its postmen and women collect and deliver the mail in every community nationwide, six days a week. Last financial year, Royal Mail lost £163m on stamped mail. That was equivalent to a 6.4p loss on average on every stamped item it handled.

Royal Mail Wholesale, which provides direct access to Royal Mail’s delivery network for its customers, has already asked Postcomm for price increases averaging 15% from May 2011.

Postcomm said in November that it was “minded to” accept a Royal Mail proposal to increase access prices at this level in May 2011. Access mail last year was loss-making for Royal Mail with losses averaging 2.5p for every item of access mail delivered by Royal Mail’s postmen and women. More than 45% of all letters delivered by Royal Mail are now handled by a rival company under access arrangements.

For 2011, Standard Parcel prices, up to 2kg in weight, are unchanged. However, prices above 2kg will increase by 8% from April. An increase in Special Delivery services was also confirmed, with prices now starting from £5.45, an increase of 40p.

Royal Mail will also introduce of a charge of £210 a year for customers to collect mail from their delivery office after 8.30am. This service, used in the main by a small proportion of business customers, is currently provided free but the introduction of the charge follows Royal Mail’s aim to set prices that fairly reflect the cost of the services provided. Every customer can choose to have their mail delivered free to their address by Royal Mail.