Royal Mail says stamp prices could rise amid soaring costs

Stamp and parcel prices could continue to rise due to soaring inflation, the Royal Mail says. In April the price of first-class stamps rose by 10p to 95p, while second-class stamp prices jumped 2p to 68p.

The Royal Mail says it is cutting costs by more than £350million to help offset “significant headwinds” of higher wage demands and surging energy and fuel costs. The group, which reported an 8% rise in underlying operating profits to £758million for the year-end to March, said it is at a “crossroads” in its overhaul.

But this is a problem for the Royal Mail as it has to maintain its ‘universal service’. This is the promise that it costs consumers the same price to send a letter to any address in the UK, six days a week.

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The Royal Mail is also grappling with the fact Brits send fewer letters than they used to – meaning it makes less money. Simon Thompson, chief executive of Royal Mail, said: “As we emerge from the pandemic, the need to accelerate the transformation of our business, particularly in delivery, has become more urgent.

“Our future is as a parcels business, so we need to adapt old ways of working designed for letters and do it much more quickly to a world increasingly dominated by parcels. The last two years has shown us all how quickly customer needs can change.

“We have no time to waste.”

Last week Royal Mail acknowledged that its performance “needs to improve” after admitting that a fifth of items sent first-class are no longer arriving the next day. The delivery giant aims to deliver the majority of first class letters the following day including Saturdays – and traditionally has met this target.

However, it’s now said one in five 95p-a-stamp letters are not landing through letterboxes within 24-hours due to Covid. Royal Mail said its service standards had been “materially impacted” by the pandemic and workers self-isolating over the past year.

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