Royal Mail has warned that it will likely increase the prices of stamps and parcels again as it grapples with higher costs for wages, energy, and fuel. The company stated it would attempt to 'mitigate' these expenses through 'price increases and growth initiatives'. This follows a previous rise earlier this year, when first class stamps went up by 10p to 95p and second class stamps by 2p to 68p.
The warning comes as Royal Mail faces 'significant headwinds' from rising costs, prompting it to raise its cost-cutting target to over £350 million, up from £290 million. A spokeswoman said no final decisions on future prices have been made, but any changes would consider the impact on customers and the sustainability of the Universal Service.
The company is also continuing its transformation as parcel deliveries become more central to its business. Letter volumes have fallen by over 60% since their peak in 2004-05 and by about 20% since the pandemic began, while parcel deliveries surged during the pandemic. Chief executive Simon Thompson emphasised the need to accelerate change, stating: '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.'
Royal Mail reported an 8.8% drop in pre-tax profit to £662 million for the year to the end of March. The company is also engaged in an ongoing pay dispute with its largest trade union and has cut around 700 management roles this year, following the axing of 2,000 managers in June 2020. Delivery disruptions over Christmas and January drew heavy criticism, with Citizens Advice estimating that 2.5 million customers missed important documents. Royal Mail attributed the delays to Omicron-related staff shortages but said the 'vast majority' of post was delivered on time.
