3 April 2011 Last updated at 19:16 ET

Record 5p rise in price of a first-class stamp

 

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Higher UK postage prices have come into force - with a first-class stamp now costing 46p.

This is a record 5p rise in the cost of sending standard letters weighing up to 100g by first-class post.

Royal Mail has also increased the cost of a second-class stamp by 4p to 36p. A first-class, large letter stamp has risen by 9p to 75p, and by 7p to 58p for second-class mail.

A watchdog described the inflation-busting rise as "disappointing".

Spending

The average UK household spends around 60p a week on stamps, according to Royal Mail. These price rises would add 6p to this amount, it said.

However, in cash terms, the 5p rise is the highest recorded for first-class stamps.

Regulator Postcomm gave permission for the increase in November, and the plans were announced by Royal Mail a month later.

Price increases in full

• Standard letters: 1st-class up 5p to 46p; 2nd-class up 4p to 36p
• Large letters: 1st-class up 9p to 75p, 2nd-class up 7p to 58p
• Franked mail: 1st-class up 3p to 39p, 2nd-class up 3p to 28p
• Parcels: below 2kg unchanged, above 2kg up 8%
• Special deliveries minimum up 40p to £5.45

Postcomm said the changes would help Royal Mail to fund its modernisation programme and help safeguard the one-price-goes-anywhere universal service in the UK.

Moya Greene, of Royal Mail, said that the decision had not been taken lightly.

"We have thought carefully about these increases as we are conscious of the difficult economic circumstances our customers are facing," she said.

"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 do not 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."

Competition

Philip Cullum, of watchdog Consumer Focus, said people would be extremely disappointed by the latest rise in prices above inflation.

"Royal Mail needs to modernise but customers are being asked to pick up the tab. In return, they will expect to see a far more efficient, effective and competitive service," he said.

Hosiery business UK Tights uses Royal Mail to send its orders to customers.

"This cost increase as well as the VAT increase will have a direct effect on our profitability. For us there is no real alternative to Royal Mail as we send low-cost small packets," said Jonathan Barber, who set up the business with his wife Dawn.

"Royal Mail has no competition in this market sector. We feel this needs to change."