New Royal Mail postage prices for April 2009

23/12/2008

Royal Mail today announced that the price of First and Second class stamps for standard letters weighing up to 100g would rise by 3p, to 39p and 30p respectively, from 6 April 2009, in line with the price controls set by the regulator, Postcomm.

The price increases will add less than 5p to the average UK household’s weekly expenditure - households currently spend around £26 on postage each year, considerably less than on other forms of communication, including telephone and broadband services.

After the new prices take effect, Royal Mail’s stamp prices will remain among the lowest in Europe, while Quality of Service is among the best. However, even after these price rises stamped mail will still be loss making for Royal Mail.

Earlier this month the report of the Independent Review Panel led by Richard Hooper highlighted the scale of the challenge presented by rapidly falling mail volumes and the need to ensure that the Universal Service can be secured for the future. Last year Royal Mail lost more than £100 million providing the Universal Service, and more than £200 million across the wider area of services whose prices are set by the regulator.

Luisa Fulci, Royal Mail’s Director of Marketing Services, said: "Stamped mail remains very affordable and consumers are still receiving excellent value for money - most countries in Europe charge more to deliver less. Our overriding priority must be to safeguard the currently loss making six-days-a-week one-price-goes-anywhere Universal Service - a task which the current market makes much harder, as big business customers choose other forms of electronic communications or competing operators instead of continuing to subsidise consumers.

"The change in the way people communicate is accelerating the structural decline in market volumes, with the Hooper report predicting that volumes could fall by between five and seven per cent a year."

Business customers will see price increases averaging 4.2%, but the changes include a range of measures to ensure that both large and small businesses can get the best value for money from Royal Mail’s services:

- Smaller price increases for businesses using franking machines and pre-paid accounts;

- Increased discounts for machineable mail and lower than inflation increases for many bulk business services including Mailsort 2.

Royal Mail’s most recent independently measured Quality of Service report showed all First and Second Class mail, Standard Parcels, Special Delivery and bulk business services were delivered at target beating performance levels.

The full details of new prices are published on Royal Mail’s website at www.royalmail.com/prices2009.

Ms Fulci added: "We are committed to ensuring that prices remain as competitive as possible while complying with the price controls set by the regulator and ensuring that Royal Mail can continue to fund the one-price-goes-anywhere stamped mail service to the UK’s 27 million addresses against the backdrop of greater competition and falling mail volumes."

Ends

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