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- The cost of stamps is now so high that it is affecting Christmas card sales, stores report
The festive period is the busiest time of year for mailing, and many households happily send dozens of Christmas cards to friends and loved ones.
But the rising cost of postage has caught many Brits off guard this year as they head out to stock up on stamps for their Christmas postal sprees.
Royal Mail has increased the cost of a first class stamp three times this year, from £1.10 to £1.65, while second class stamps now cost 85p each, up from 75p at the beginning of 2024.
This means a book of eight first-class stamps now costs £13.20 compared to £8.80 last Christmas.
Some retailers have blamed the high cost of stamps for lower-than-usual Christmas card sales, with John Lewis noting that boxed card sales have fallen 23 percent and individual card sales have fallen 15 percent.
Prices for first-class stamps have increased at a steep rate over time, with a 511 percent increase in cost between 2000 and today.
Second class stamps have not risen as quickly: from 19p to 85p today, an increase of 347 per cent. But the gap between the two is now 80p compared to 8p in 2000.
So what’s fueling runaway stamp costs and what’s the future for stamp prices?
The reasons for the increase in the price of stamps
The recent sharp rise in stamp prices is due to a number of reasons, ranging from declining letter numbers to regulation and rising staff costs.
The main reason for the rise in stamp prices is Royal Mail’s legal requirement to deliver a letter anywhere in the country for the same rate, six days a week, while parcels must be sent five days a week.
This requirement, the “universal service obligation”, combines with the dwindling volume of letters sent to form a money pit for the Royal Mail.
The number of letters sent fell from 20 billion a year in 2004/5 to 6.7 billion in 2023/4.
But the postal service has to maintain an expensive transportation network to deliver this dwindling amount of mail to every home in the country, so it argues that increases in stamp prices are inevitable.
Nick Landon, chief commercial officer at Royal Mail, said: “It takes a complex and extensive network to get every letter and parcel across the country for a single price – traveling by lorry, plane, ferry and, in some cases, drone. to reach their destination.” final destination (delivered) on foot.
“We are proud to offer universal service, but the financial cost is significant.”
This situation is exacerbated by the increasing number of households in the UK having to receive mail. Royal Mail said the number of homes it delivers to increased by four million between 2004/25 and 2023/24.
Additionally, a series of Royal Mail strikes in 2022 and 2023 severely affected deliveries and cost the company £200 million.
Further cost pressure for Royal Mail came in the 2024 budget, when chancellor Rachel Reeves unveiled increases to national insurance, effectively adding £120m to its pay bill.
What is the future of stamp prices?
As the data in the graph above shows, stamp prices only do one thing: go up.
The level of any increase will vary, but it will take a lot to derail the strong level of price increases seen in recent years.
One immediate pressure is the additional national insurance bill faced by Royal Mail.
This will cost Royal Mail an extra bill of £120m a year as it employs around 130,000 people.
Martin Seidenberg, director of Royal Mail’s parent company International Distribution Services, said prices would have to rise in response.
An alternative – or possibly an addition – to increasing prices is to reduce service levels instead.
Royal Mail wants to water down its universal service so it doesn’t have to deliver mail as frequently.
Postal regulator Ofcom is considering this and has already hinted that Royal Mail could be allowed to have to deliver second class letters on Saturdays.
Ofcom is also mulling whether it could allow second class mail to be delivered every two working days.