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Royal Mail PLC (LSE:RMG) said the prices of first- and second-class stamps are to go up, just weeks after telling customers it was going to move towards a barcode service instead.
First-class stamps will go up by 10p to 95p, while second class stamps will increase by 2p to 68p.
The postal delivery service said the rationale behind the decision was so it could continue to deliver its universal service obligations.
It added that inflation and the pandemic have combined to push the volume of letters sent down more than 20%, and that the price increase is necessary to pay for operating costs.
“Whilst the number of letters our postmen and women deliver has declined from around 20bn a year to around 7bn since 2004/5, the number of addresses they have to deliver to has grown by around 3.5mln in the same period,” said chief commercial officer Nick Landon.
“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.”
The company defended its decision by reminding customers that its stamps are still cheaper than most of Europe.
Unite, the trade union, has blasted the decision to increase stamp prices while cutting services and turning a profit, labelling the company as greedy.
“The Royal Mail boardroom is again raising prices while helping itself to massive profits. It is behaving like a short-term greedy speculator rather than the responsible owner of a key UK public service,” said general secretay Sharon Graham.
In recent weeks the shares have been hit with two downgrades by analysts, who predict headwinds that make for a gloomy outlook.
A decline in parcel growth, labour cost inflation and a lack of investment were some of the issues highlighted by Credit Suisse.
Its main trade union has submitted a new pay claim, which would need to be around 7.8% if it is to match inflation, ahead of the next round of pay talks.
Shares were down 1.66% in afternoon trading, changing hands at 355p.
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