Three years of stamp price rises on the way: Company plans further hikes after rules that controlled rises were scrapped before privatisation

  • Price of a first class stamp will rise again over the next three years
  • Royal Mail admits 'substantial' price increase to 60p in April 2012
  • Decision comes as rules which controlled price hikes were scrapped before the stock market float

By Becky Barrow

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The price of a first class stamp will jump higher over the next three years

The price of a first class stamp will jump higher over the next three years

The price of a first class stamp, which has rocketed to 60p, will jump higher over the next three years it emerged last night.

According to details buried in the Royal Mail’s prospectus, the newly privatised company still plans further price rises.

This is despite the fact it admits the ‘substantial’ price increase from 46p to 60p in April 2012 did trigger a drop in the number of letters sent.

The price shock comes after strict rules – which used to control Royal Mail’s ability to increase prices – were scrapped before the stock market float.

The move was one of many changes, which also included allowing the company to dump a £12billion pension black hole on the taxpayer, that were made to prepare Royal Mail for a sell-off.

As a result there is now no official limit on how much the former state monopoly can raise stamp prices, or a cap on how many times they can be increased each year.

The only protection around stamps is the price of a second-class stamp, which costs 50p.

Under rules, laid down by the regulator Ofcom, the maximum price which Royal Mail can charge for a second-class stamp is currently 56p.

In its prospectus, Royal Mail said directors ‘expect any price increase to be broadly in line with RPI over the three financial years ended in 2016’. RPI is the retail prices index measure of inflation, typically higher than the more commonly used consumer prices index.

For example figures published yesterday by the Office for National Statistics show RPI is 3.2 per cent, but CPI is only 2.7 per cent.

 

Official forecasts, from the independent watchdog the Office for Budget Responsibility, show RPI is predicted to be 2.8 per cent in 2014, 3.2 per cent in 2015 and 3.6 per cent in 2016.

If correct, the price of a first-class stamp could hit 66p over the next three years.

Royal Mail chief executive Moya Greene said the company has to be ‘very careful about pricing’.

The price shock comes after strict rules were scrapped before the stock market float

The price shock comes after strict rules were scrapped before the stock market float

She added: ‘I don’t think you’re going to see a company that is going to be senseless about the pricing lever.’

Miss Greene said Britain is in the ‘low to middle of the spectrum’ compared to stamp prices in the rest of the European Union and insisted Royal Mail must ‘retain the loyalty of our customer base’.

Yesterday the Greetings Card Association said stamps are ‘really good value’ but it would ‘not be happy’ to see large increases.

Last year’s price hike caused such furore that Royal Mail agreed to allow millions on benefits to buy stamps at the old price last Christmas.

In another bid to pacify concerns, Royal Mail did not increase stamp prices in April this year.


The comments below have not been moderated.

No o o o o o oh!!!!! Really?? Now who would have thought that! The writing was on the wall all the time - wasn't it.

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The CONservatives and the Limp Dems have deliberately undervalued the Royal Mail privatisation as a means of transferring a public asset into private hands.. The only real winners from will be The Bankers and Hedge Fund Managers. Everybody else loses,especially as the universal delivery service is gradually be withdrawn.

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Well, Well, Well, Who would have guessed it. I suppose this will now mean that the price of the delivery of online shopping will now go up. Yet again, let's just rip off the country's decent people who just want to survive.

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The next thing will be closure of all town centre post offices, so the buildings can be sold off. We will be left with out of town mini post offices,

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Most of the stuff that comes through my letterbox is junk mail that goes straight in the bin unread. If I want to talk to anyone I use the phone. If i have business to transact most firms have internet access, I don't need post to contact them.

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I bought a load of stamps before they went up last year. I have still got 50+ left. I also hand deliver any that I can. Also I will use 2nd class once 1st class are all used up.

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lol forever

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If you must post Christmas cards check the size you're sending. So many people get caught out with the different size pricing.

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All of you still moaning about privatisation are so wrong... The directors are having a paddy fit to spite the world because they will now have to work for a living. A private company cannot put prices through the roof... they will go bankrupt! It is as simple as that... This is all scaremongering believe me :)

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And this was the intention all along. Someone's making a fortune out of this on the side.

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