First-class stamp price to rise by 5p as takeover by Czech billionaire looms

The cost of a first-class stamp is to rise by 5p as Royal Mail gears up for a looming takeover by Czech billionaire Daniel Kretinsky.

The postal service said it would raise the price of a first-class stamp to £1.70 on April 7, while second-class stamps would increase by 2p to 87p.

It marks the sixth price rise in three years as Royal Mail tries to stem heavy losses caused by a sharp decline in letter sending.

The latest rise means Britons will have to pay almost as much for a stamp as they do for a greeting card. The average cost of a card in the UK stands at £1.89.

The price increase has been announced ahead of a £3.6bn takeover of Royal Mail by Mr Kretinsky, the tycoon known as the “Czech sphinx”. The deal has been given the green light by the UK Government, but is being held up by a political crisis in Romania, which must also give regulatory clearance.

Mr Kretinsky’s EP Group had been under pressure from ministers and union bosses to rule out further increases to first-class stamp prices as part of a slate of legally binding undertakings made as part of the takeover.

However, no specific cap was agreed, with the billionaire merely agreeing not to push through unreasonable price rises.

The price of a second-class stamp is regulated by Ofcom, which ties annual increases to inflation.

Royal Mail said it carefully considered its pricing as it tried to balance affordability with the rising cost of delivering mail.

Annual letter volumes have fallen sharply from 20bn to less than 7bn over the last two decades, with this figure expected to tumble further to 4bn within the next four years.

The number of UK addresses has risen by around 4m over the same period, driving up the cost of each delivery.

Royal Mail’s universal service obligation requires it to deliver letters to any address six days a week at a fixed price.

However, Ofcom is preparing to overhaul the rules to allow Royal Mail to scrap second-class letter deliveries on alternate weekdays and Saturdays.

The postal service has estimated the changes could save it £300m per year and it is carrying out trials of the reduced service at roughly 1m addresses. Under the plans, first-class mail would continue to be delivered six days a week, including on Saturdays.

Other countries are taking a more radical approach to the decline in letter sending. Denmark’s state-owned postal service this week said it would end all letter deliveries at the end of this year, citing a 90pc drop in volumes over the last 25 years.

Nick Landon, the chief commercial officer at Royal Mail, said: “We always consider price changes very carefully but the cost of delivering mail continues to increase. A complex and extensive network of trucks, planes and 85,000 posties is needed to ensure we can deliver across the country for just 87p.