Royal Mail saw huge fall in letter deliveries after it hiked first class stamp prices

Privatised postal giant Royal Mail increased the price of a first class stamp to £1.65 in October – and there are fears of another increase to come

Royal Mail saw the number of letters and cards posted slump by more than 130 million after it imposed a stamp price hike last October.

The former state-owned company – which is poised to be bought by Czech billionaire Daniel Kretinsky – upped the cost of a first class stamp by 30p to £1.65 last October. It was the fifth increase in less than three years. Figures show Royal Mail handled 1.65 billion addressed letters – anything with the recipients’ name on rather than junk mail – in the three months to the end of December.

That was down 7% on the same period the year before. It covers the peak run-up to Christmas. However, there have been anecdotal reports that spiralling stamp prices prompted a growing number of people to scale back how many festive cards they sent to friends and family, or ditch the tradition altogether.

The latest fall continues a steady decline in the number of addressed letters sent, fuelled by a wave of previous stamp price increases as well as changing consumer habits. While senders shelled out more, Royal Mail’s revenues from addressed letters rose 1.4% to almost £1.1billion over the three months.

Second class stamp prices remained at 85p last October. They are capped, but this can rise in April in line with the previous September’s level of inflation, which was 1.7%. There are concerns that first class stamp prices could rise again, potentially in April.

It comes after Royal Mail’s owner has complained about rising costs and the financial burden of providing the legally-binding Universal Service Obligation to deliver letters and parcels to all UK addresses at a single price. Martin Seidenberg, boss of Royal Mail owner International Distribution Services (IDS), said: “Whilst the market backdrop remains difficult, we are focused on strategic delivery and mitigation of inflationary pressures.”

In November, IDS warned of £120million hit from the government’s national insurance rise from April. Releasing nee results, IDS said it remained on track to return to profit in the year to March, “representing a significant milestone in the turnaround of Royal Mail, following two years of losses”.

Royal Mail saw parcel deliveries rise 2% to 395 million in the final three months of 2024 which, along with price rises, helped revenues from parcels increase 3.2% to £1.25billion. IDS also owns overseas parcels firm GLS. The figures come as the takeover by Kretinsky’s EP Group is expected to finalise by the end of March, having been cleared by the Government last month.

Mr Seidenberg said: “At Royal Mail, we have made more progress to adapt to customer demand. Successful execution of our union agreements is bringing increased operational flexibility, which together with increased automation, and thousands of new vehicles, is leading to improved reliability.”

Royal Mail has started installing lockers in the street for customers to send parcels from. It means people wanting to despatch larger items will not need to visit a Post Office or hire a courier. There are plans to allow collections from lockers soon too, rather than waiting in for a delivery. The first lockers opened outside the firm’s Mount Pleasant mail centre in Central London, with 250 to be rolled out in early 2025. Thousands more sites are planned after that.