Royal Mail issues urgent one month warning as stamp price to be hiked again

The inflation-busting rise comes in the same week as Ofcom, the postal regulator, said that Royal Mail might get the green light to scrap Saturday deliveries for second class letters as part of a major service shake-up

Royal Mail is set to increase the price of a first class stamp by 30p, saying it’s grappling with “urgent” financial challenges.

The cost of sending a letter first class will rise to £1.65 on October 7 although second class stamps will remain at 85p. Back in April, first class stamp prices went up by 10p to £1.35, and second class stamps went up by the same amount to 85p.

In the face of dwindling letter volumes, inflationary pressures, and rising costs of upholding the Universal Service Obligation (USO) which mandates six-day-a-week deliveries, Royal Mail insists it’s tried to keep price increases to a minimum. Meanwhile, Ofcom, the postal regulator, has said this week that Royal Mail might get the green light to scrap Saturday deliveries for second class letters as part of a major service shake-up.

If the plans go through, second class mail wouldn’t land on Saturdays or every weekday; instead, delivery would be on alternate weekdays, though the three working day delivery target would stay put. Ofcom hasn’t made any final calls yet and is looking to roll out a consultation in early 2025, aiming for a decision by summer next year.

Royal Mail said letter volumes had fallen from 20 billion in 2004/5 to about 6.7 billion in 2023/4 meaning the average household now gets just four letters weekly, a sharp fall from 14 a decade ago. The number of doorsteps Royal Mail is required to service has soared by four million recently, intensifying the cost impact per delivery.

Highlighting the need for urgent reform, Royal Mail commented: “The minimum requirements of the universal service haven’t changed for over 20 years despite major changes to how people communicate.”

Royal Mail added that with letter volumes steeply declining and continued financial losses, swift action is imperative. “We have no certainty on regulatory reform and the rate of letter decline and ongoing losses means that Royal Mail has had to take the necessary steps within its power to address the very real and urgent financial sustainability challenge the universal service faces right now.”

Nick Landon, Royal Mail’s chief commercial officer, explained: “We always consider price increases very carefully. However, when letter volumes have declined by two-thirds since their peak, the cost of delivering each letter inevitably increases. A complex and extensive network is needed to get every letter and parcel across the country for a single price travelling on trucks, planes, ferries and in some cases drones before it reaches its final destination on foot.

“We are proud to deliver the universal service, but the financial cost is significant. A complex and extensive network is needed to get every letter and parcel across the country for a single price travelling on trucks, planes, ferries and in some cases drones before it reaches its final destination on foot. We are proud to deliver the universal service, but the financial cost is significant.”

“The universal service must adapt to reflect changing customer preferences and increasing costs so that we can protect the one-price-goes anywhere service, now and in the future.”