Royal Mail warning as stamp prices could be hiked even further under new boss

Royal Mail stamps could rise even further

The price of a Royal Mail stamp could rise even more after its new incoming owner refuses to rule it out.

Royal Mail is currently in the process of being sold to billionaire Czech tycoon Daniel Kretinsky. Earlier this week, International Distribution Services (IDS), the parent company of Royal Mail, accepted a staggering £3.57billion takeover bid of the once publically owned service.

The deal included commitments to retain the name, brand, UK headquarters and UK tax residency, as well as protections for employee benefits and pensions. In a recent interview with the Sunday Times newspaper, the new Royal Mail boss suggested that costs could continue to spiral in coming years. This meant he was unable to rule out price rises for Royal Mail's services - including it's stamps.

He said: "I can't make unconditional commitments. If your circulation is 50% of what it was… you either need to go home, or you need to increase the unit price and hope that people will pay for it." He added: "Because if not, you are making losses. You can be lossmaking for a year or two, but you can't be in a loss for 20 years. It's simple maths. There's no mystery to it."

Over the last few years, the price of a first claim stamp has almost doubled as Royal Mail tries to recover income from declining demand. The most recent hike was in April and saw the price of a first-class stamp reach £1.35 - this is compared to the 67p price tag in 2018.

The sale agreement included a series of "contractual commitments" to protect public service aspects of the Royal Mail - such as its universal service obligation to "one-price-goes-anywhere" first-class post six days a week. This comes as the company revealed that it was losing around £1million a day by trying to keep these targets.

At the time of the price rise announcement, Nick Landon, chief commercial officer at Royal Mail said the group "always considered price changes very carefully" but due to the decline in letters being sent prices had to rise.

He said: “It is no longer sustainable to maintain a network built for 20 billion letters when we are now only delivering seven billion. As a result of letter volume decline, our posties now have to walk more than three times as far to deliver the same number of letters as before, increasing the delivery costs per letter."

How much Royal Mail stamps currently cost

• First class - standard: £1.35
• First class - large: £2.10
• Second class - standard: 85p
• Second class - large: - £1.55