Stamp prices shoot up by record levels
The price of a first class stamp is set to rise to 60p from 46p, while second-class stamps will rise to 50p from 36p on 30 April, Ofcom announced today.
This change in prices is coming because the regulator, Ofcom, has removed price controls on Royal Mail.
It is now able to set its own prices for first-class and business mail, whereas the price of second-class stamps will be capped at 55p – but this will rise in line with inflation for each of the next seven years.
Ofcom says without the rise of stamp prices the postal service is at severe risk of failing as people use text messages, emails and online messaging services instead. Between 2010 and 2011 Royal Mail lost £120 million in its letters business and since 2006 there has been a 25% decline in the amount of mail being sent.
The cap on second-class stamps has been brought in to protect vulnerable people and discounts will still be available on posting cards over Christmas for those on pension credit and employment and support allowance or incapacity benefit.
"The universal postal service - which ensures that letters are delivered to every address in the UK six days a week - is significant and highly valued by the public. However, unless changes are made to the regulation of post, this service is under threat," says Stuart McIntosh, group director of Ofcom.
"Ofcom's proposals are designed to safeguard the UK's postal service, ensuring it is sustainable, affordable and high-quality, to the end of the decade and beyond," he adds.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).