Royal Mail Warns of Further Stamp Price Hikes After £120m Budget Hit

• Royal Mail faces rising costs due to Budget changes, including employer national insurance hikes
• Stamp prices may increase again following October’s rise to £1.65 for first class
• Universal Service Obligation under review, with potential changes to second-class deliveries

Royal Mail has warned customers to brace for another potential stamp price increase after the company took a £120 million financial hit following changes in the latest Budget. Employer national insurance contributions rose by 1.2% to 15%, with thresholds drastically reduced, increasing hiring costs for Royal Mail’s 130,000 staff.

Martin Seidenberg, CEO of Royal Mail’s parent company International Distribution Services, said: “We are looking at all measures, including pricing, parcel cost efficiencies, and investment plans. I cannot rule out increasing stamp prices.”

Last month, first-class stamp prices jumped 30p to £1.65, while second-class stamps remain at 85p. Rising costs have hindered the company’s return to profitability, with a £26 million operating loss despite increased revenues of £6.3 billion.

Royal Mail is calling on the government and Ofcom to review the Universal Service Obligation, which mandates six-day-a-week mail deliveries. Proposals being considered include cutting second-class deliveries to alternate weekdays while maintaining three-day delivery targets.

Tom Church, Co-Founder of LatestDeals.co.uk, commented: “The rising cost of postage may prompt many to rethink how they send cards and letters, but the tradition of Christmas cards remains strong for many families".