Royal Mail makes parcel price bid

Royal Mail's parcel delivery service contributes more to revenues than letters

Royal Mail is moving to defend its share of the Christmas parcels business by cutting some charges.

From 20 October to 18 January, all small parcels weighing up to 2kg will cost £2.80 to go second class.

Parcels weighing between 1kg and 2kg had previously been priced differently, so will be £1 cheaper.

There will also be a permanent increase in the permitted dimensions of small parcels. Some now defined as medium, costing £8, will drop a category.

People whose gifts qualify as "small" rather than "medium" could save £5.20 from the size-change and the Christmas offer.

The promotion comes as Royal Mail tries to head off challenges from DHL, TNT and Yodel and hang on to its share of the market, which sees it usually handle 115 million parcels over December.

Royal Mail was privatised by the government, with a flotation on the London Stock Exchange a year ago.

In July, it said price changes and competition from rivals had affected its parcels business. Parcels revenue fell 1% in the three months to 29 June from a year earlier, and Royal Mail said parcels revenue for the year could miss expectations.