Page last updated at 14:46 GMT, Wednesday, 30 September 2009 15:46 UK

Stamp prices may rise next year

Book of first class stamps
Stamp prices last rose in April this year

The price of both first and second-class stamps may rise again in April, regulator Postcomm has confirmed.

While no final decision has been made, it has given initial backing for Royal Mail to increase the cost of a standard first-class stamp by three pence.

This would take the price up to 42p. At the same time, standard second-class stamps may rise by 2p to 32p.

Postcomm said Royal Mail needed the extra funding to compensate for the continuing decline in mail volumes.

'Low blow'

The regulator said that even with the proposed price rises, Royal Mail's letters and parcels division would still lose money next year if mail levels decline by 10% as expected.

Postcomm's announcement comes after Royal Mail wrote to it on 8 September, asking to be able to raise stamp prices "in light of the current market situation facing the company".

The regulator has now put the issue of potential stamp price rises out for public consultation, with a financial decision due before the end of the year.

Customer body Consumer Focus has described the planned price hikes as a "low blow".

Stamp prices were last increased in April this year.

Strike woes

Royal Mail is continuing to be hit by a number of localised strikes by staff fearful of job cuts as the organisation continues with its plans to streamline and modernise the business.

The result of a ballot by the Communication Workers Union (CWU) calling for a nationwide strike by postal workers will be announced on either 8 or 9 October.

While the CWU is demanding that Royal Mail signs an agreement with it to determine the exact scope of job cuts, Royal Mail counters that an earlier deal with the union in 2007 had already sanctioned all necessary future redundancies.

The most recent figures show that the Royal Mail's letters and packages unit made an annual profit of £58m in 2008 from a turnover of £6.7bn.

Royal Mail counters that this is a very small profit considering the size of the turnover, and staff cuts are required to prevent it returning to losses in the future.

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