Royal Mail to hike stamp prices again despite cost of living crisis
Royal Mail has warned it will hike the prices of its stamps again as it tries to cover the higher costs of wages, energy and fuel.
The postal service increased its prices just last month, with first class stamp prices rising by 10p to 95p, while second class stamps increased by 2p to 68p.
The firm said it was facing "significant headwinds" from rising costs and is continuing to change the business to cope better.
It is cutting costs by more than £350 million to help offset the hit, but said it would have to look at price rises again.
What is causing Royal Mail stamps to rise in price?
Royal Mail said it was at a "crossroads" as parcel delivery is becoming ever more important.
It is a problem for the firm as it has to maintain its ‘universal service’ - the promise that it costs consumers the same price to send a letter to any address in the UK, six days a week.
It is also grappling with the fact that Brits are sending fewer letters than they used to, meaning the company is making less money.
Letter volumes have fallen by more than 60% since their peak in 2004-05 and by about 20% since the pandemic began, although parcel deliveries increased during the pandemic.
The price hike comes after the business reported an 8.8% drop in pre-tax profit to £662m for the year to the end of March.
The delivery giant is also facing an ongoing pay dispute with its largest labour union.
In January it said around 700 management roles would be cut and in June 2020 it axed a fifth of its managers, around 2,000 posts.
Is the firm struggling?
Last week Royal Mail acknowledged that its performance "needs to improve" after admitting that a fifth of items sent first-class are no longer arriving the next day.
The firm aims to deliver the majority of first class letters the following day including Saturdays and has traditionally met this target.
However, it is now said that one in five 95p-a-stamp letters are not landing through letterboxes within 24-hours due to Covid.
Earlier this year the company was heavily criticised for delivery disruptions over Christmas and January.
Citizens Advice estimated that 2.5 million Royal Mail customers didn not receive important documents such as health appointments, fines or bills.
Royal Mail said the emergence of the Omicron wave meant that thousands of staff members had to take time off over Christmas and January, but is stressed the "vast majority" of post was delivered on time.
What has Royal Mail said?
Royal Mail said its service standards had been "materially impacted" by the pandemic and workers self-isolating over the past year.
Simon Thompson, chief executive of Royal Mail, spoke of the importance of the firm changing how the business is run.
He said: "As we emerge from the pandemic, the need to accelerate the transformation of our business, particularly in delivery, has become more urgent.
"Our future is as a parcels business, so we need to adapt old ways of working designed for letters and do it much more quickly to a world increasingly dominated by parcels.”
He added: "The last two years has shown us all how quickly customer needs can change. We have no time to waste."