- The cost of stamps is now so high it is hitting Christmas card sales, shops report
The festive period is the busiest time of year for sending post, with many households merrily sending dozens of Christmas cards to friends and loved ones.
But the rising cost of postage has caught many Britons off-guard this year as they head out to stock up on stamps for their Christmas posting 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 start of 2024.
It means a book of eight first-class stamps is now £13.20 compared to £8.80 last Christmas.
Some retailers have blamed the high cost of stamps for lower than usual sales of Christmas cards, with John Lewis noting sales of boxed cards have fallen 23 per cent and individual card sales by 15 per cent.
First-class stamp prices have risen at a steep rate over time, with a 511 per cent increase in the cost between 2000 and the present day.
Second-class stamps have not risen as rapidly – up for 19p to 85p today, a 347 per cent rise. But the gap between the two is now 80p versus 8p in 2000.
So what is fuelling the runaway cost of stamps, and what is the future for stamp prices?
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The reasons for stamp price rises
The recent steep rise in stamp prices has several reasons, ranging from the decline of letters through to regulation and increasing staff costs.
The main reason for the stamp price hike is the Royal Mail’s legal requirement to deliver a letter to anywhere in the country for the same fee, six days a week, while parcels must be sent five days a week.
This requirement, the ‘universal service obligation’, combines with the declining volume of letters being sent to form a money pit for the Royal Mail.
The number of letters being sent fell from 20billion a year in 2004/5 to 6.7billion in 2023/4.
But the postal service has to maintain an expensive transport network in order to deliver this falling amount of post to every home in the country, so it argues stamp price rises are inevitable.
Nick Landon, chief commercial officer at Royal Mail, said: ‘A complex and extensive network is needed to get every letter and parcel across the country for a single price – travelling on trucks, planes, ferries and in some cases drones before it reaches its final destination [delivered] on foot.
‘We are proud to deliver the universal service, but the financial cost is significant.’
This situation is worsened by a rising number of households in the UK which have to get post delivered. Royal Mail said the number of houses 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 hit deliveries and cost the firm £200million.
Yet another cost pressure for Royal Mail came in the 2024 Budget, when chancellor Rachel Reeves unveiled rises in National Insurance, effectively adding £120million to its wages bill.
What is the future for stamp prices?
As the data in the above chart shows, stamp prices only ever do one thing – rise.
The level of any increase will vary, but it will take a lot to derail the steep level of price hikes seen in recent years.
One immediate presure is the additional National Insurance bill Royal Mail faces.
This will give the Royal Mail an extra £120million-a-year bill, as it employs around 130,000 staff.
Martin Seidenberg, head of Royal Mail parent firm International Distribution Services, said prices would need to rise in response.
An alternative – or possibly an addition – to hiking prices is that service levels are cut instead.
Royal Mail wants to have its universal service watered down, so it does not have to deliver post as frequently.
Postal regulator Ofcom is considering this, and has already hinted that Royal Mail could be let off having to deliver second-class letters on Saturdays.
Ofcom is also mulling whether it could allow second-class post to be delivered on every other weekday.
