Royal Mail stamp prices rising

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File photo dated 27/3/2012 of first and second-class stamps. The price of a first-class stamp is to increase by 2p to 62p and second class by 3p to 53p from the end of March, the Royal Mail announced today. PRESS ASSOCIATION Photo. Issue date: Friday February 28, 2014. See PA story INDUSTRY Stamps. Photo credit should read: Rui Vieira/PA Wire

Higher stamp prices come into force today, with first class increasing by 2p to 62p and second class by 3p to 53p.

The now-privatised Royal Mail said it had ''thought carefully'' about the impact on customers and its business before announcing the decision last month, pointing out that the last rise was two years ago.

Royal Mail's said its prices remained amongst the best value for money in Europe, as well as the company having the highest service specification of any major European country.

The postal group said that under the regulatory framework, it could have increased second class stamps to 57p, adding that its prices were among the best value in Europe, where the average for a first class letter is 67p and 60p for second class.

A large letter first class stamp up to 100g increases by 3p to 93p, while a large second class stamp will go up by 4p to 73p.

Consumer Futures said the 3% rise in first class and 5% increase in second class stamp prices were above the current inflation rate

Since 2009, prices have increased by 59% for first class and 77% for second class, the consumer group pointed out.

Dimitris Hiotis of pricing specialists Simon-Kucher & Partners, said: "Consumers and businesses can expect price increases above inflation as long as Royal Mail has market power in letters and small packages, and the regulatory framework allows it.

"As Royal Mail is now a publically traded company with profit targets to meet, we expect the market to demand they maximise their ability to raise prices on an ongoing basis, particularly if transformation efforts are slower or cost more than expected and profits aren't delivered.

"The larger price increase on second-class stamps indicates consumers and businesses switch to second class as a result of price increases. Royal Mail wants to limit this switching down, and consumers can expect the gap to continue to close in future price rises to prevent this, probably until Royal Mail reaches the regulatory price cap on second-class of 57p.

"Consumers should stock up on first and second-class stamps prior to these annual price rises to avoid the price increases."

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