Cost of stamps to rise next year

23 December 2009

The price of first and second-class stamps will increase next year, Royal Mail has confirmed

First-class stamps for standard letters weighing up to 100g will rise by 2p to 41p, while second-class stamps will increase in price from 30p to 32p. Royal Mail estimates the rises will add 3p onto the average household’s 50p weekly expenditure on postage.

The cost of sending ordinary meter and account mail, which is largely sent by small businesses, will remain at 36p and 25p respectively.

Alex Smith, Royal Mail’s commercial and strategy director, says the increase to stamp prices will only affect around 12% of mail sent in the UK.

He adds: "Stamp prices remain affordable and represent excellent value for money - Royal Mail continues to offer consumers a more extensive, to-the-door, six-days-a-week service than many European countries and does so at a lower price than most other operators.”

The move to increase the price of stamps was expected, following the regulator Postcomm giving its approval for a rise back in September. It says this is needed to help Royal Mail cope with its cashflow problems.

Royal Mail says the increases reflect the continuing financial losses it makes in collecting and delivering stamped mail - some £250 million in 2008/09.

Earlier in December, Royal Mail reported an operating profit of £184 million operating profit from the first half of the financial year, up 4% on the profit made during same period the previous year.

However, overall group revenue dipped - largely because mail volumes have taken a 8% hit from the effects of recession and the growth in electronic communications.

Cashflow is also negative - it experienced an outflow of £434 million during the six-month period - driven by continuing investment, the cost of voluntary redundancies, and Royal Mail’s £10 billion pension deficit.

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