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Royal Mail has warned of possible further increases in prices after recently hiking up costs of posting letters and parcels.
The group said prices are being held under constant review amid rising inflation, after the cost of posting letters rose by an average of around 7 per cent, and parcel prices by an average of about 4 per cent at the start of April.
It has now cautioned of a further push in cost savings, increasing its target to more than £350 million from around £290 million previously.
Here is an overview of how Royal Mail letter prices have increased this year:
Meanwhile, if you are shipping via standard post a first-class stamp will now cost you 95p. Second class stamps have increased by just 2p to 68p.
Find a full breakdown of costs here.
Why have prices increased?
Royal Mail has blamed a combined impact of rising inflation and a declining use of letters for the increase in prices.
Nick Landon, chief commercial officer at Royal Mail said when the stamp increase was announced: “We understand that many companies and households are finding it hard in the current economic environment, and we will always keep our prices as affordable as possible.
“Whilst the number of letters our postmen and women deliver has declined from around 20 billion a year to around seven billion since 2004/5, the number of addresses they have to deliver to has grown by around 3.5 million in the same period.
“We need to carefully balance our pricing against declining letter volumes and increasing costs of delivering to a growing number of addresses six days a week.
“As customer needs change and we see a greater shift from letters to parcels, it is vital that the universal service adapts to stay relevant and sustainable.
“These price changes are necessary to ensure we can continue to maintain and invest in the one-price-goes-anywhere universal service for future generations.”
What to expect from future price increases?
Royal Mail insisted it was not planning further job losses to meet the new target, having in January already announced about 700 management jobs would go as part of already announced cost-cutting aims.
The firm reported an 8% rise in underlying operating profits to £758 million for the year to the end of March.
On a reported basis, pre-tax profits fell 8.8% to £662 million.
Royal Mail said it hoped to meet earnings expectations for its UK business over the year ahead, if it can agree a pay deal with its union that is “broadly” in line with its current offer.
Chief executive Simon Thompson said the group remains in “intense discussions” with the Communication Workers Union (CWU) as they look to agree on pay.
Royal Mail cautioned that it expects revenues in its core UK postal arm to fall over the year ahead, with a significant drop in Covid testing kits and also a drop in parcel deliveries as consumers rein in spending.
The shift back to high street shopping following the end of pandemic restrictions will also impact parcel deliveries and it said there has been a weakening of parcel business growth since the final quarter of its last financial year.
Mr Thompson said the firm was already seeing “some impact” of the cost-of-living crisis on parcel demand and a “fall away from peaks” during lockdowns when shops were shut.
