The price of stamps is set to rise from January, with a 1st class stamp going up 9p to 85p and a second class one up 1p to 66p, Royal Mail has announced.
Bosses said they have "considered any pricing changes very carefully" due to the coronavirus pandemic but said the rises were "necessary to help ensure the sustainability" of the universal service.
The new prices start from January 1 and come just weeks after Royal Mail revealed letter volumes have fallen 28% in the six months to September 27, compared with a year earlier.
Royal Mail said: "The reduction in letter volumes has had a significant impact on the finances of the universal service which lost £180 million in the first half of the year.
"This demonstrates the need for change in the universal service. We are working tirelessly to deliver the most comprehensive service we can in difficult circumstances as the coronavirus pandemic continues to impact our operation."
Defending the price rises, the company added that the Covid-19 pandemic had cost it £85 million during the period on protective equipment, covering absences, overtime and agency staff.
Nick Landon, chief commercial officer at Royal Mail, said: "Like other companies, 2020 has been a challenging year for Royal Mail.
"Our people have worked tirelessly to keep the UK connected throughout the pandemic and associated restrictions.
"These price increases will help us continue to deliver and sustain the Universal Service in challenging circumstances."