Postage prices rise as Royal Mail fights to recoup losses

The cost of posting a large letter will rise by 9p to 75p for first class and by 7p to 58p for second class mail.

The Royal Mail said stamp prices for letters weighing up to 100g will continue to be among the lowest in Europe even after the increase.

The increase will add about 7p to the average household's weekly spend of about 60p on postage, said the postal group.

Royal Mail chief executive Moya Greene said: "We have thought carefully about these increases as we are conscious of the difficult economic circumstances our customers are facing. No-one likes to pay more and we regret having had to take these tough decisions on pricing. After these increases, we will continue providing value-for-money as our prices will still be among the lowest in Europe.

"We are investing heavily to modernise our operations, which is all about providing our customers with the services they need in today's open, highly competitive postal marketplace.

"With the sharp declines in mail volume, our revenues are falling. That means if we don't generate more income, we will simply not be able to keep funding our six-days-a-week collection, sorting, transport and delivery operation to the UK's 28 million homes and businesses."

The Royal Mail pointed out that in the last financial year, it lost 163m on stamped mail, equivalent to a 6.4p loss on average on every stamped item it handled.

The price of sending a standard parcel up to 2kg in weight will be unchanged but will increase by 8 per cent for heavier items.

Special delivery services will start from 5.45 next April, an increase of 40p, while a charge of 210 a year will be introduced for customers to collect mail from their delivery offices after 8.30am.

This service, used mainly by business customers, is currently provided free of charge.

An Age UK spokesman said: "Older people are more likely to be affected by an increase in the price of stamps simply because they are less likely than younger age groups to communicate via the internet and email.

"Although the planned 5p rise will seem paltry to many, it still represents a 12 per cent increase to the current price which could make quite a difference to those on a low fixed income."

A spokesman for Consumer Focus said the increase could add at least 30m to the cost of Christmas post next year.