Price of first class stamps to rise 9p to 85p

The cost of a first class stamp will rise by 9p to 85p on 1 January, Royal Mail has announced.

A second class stamp will also go up in price, rising by 1p to 66p on the same day.

Prices were raised to their current levels in March. Royal Mail said the latest move was "necessary to help ensure the sustainability" of the universal service.

It said 2020 had been a "challenging year" for the business.

The company added that it had "considered any pricing changes very carefully" owing to the coronavirus pandemic.

Pandemic effect

The move comes shortly after it revealed letter volumes had fallen 28% in the six months to September 27, compared with a year earlier and that revenue from parcel deliveries has surpassed letters for the first time, fuelled by a surge in online shopping during the pandemic.

Royal Mail said: "The reduction in letter volumes has had a significant impact on the finances of the universal service which lost £180m 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 £85m 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."

Regulator Ofcom said last week that Royal Mail would be able to cut Saturday letter deliveries and still meets the needs of most customers.