Cost of Stamps to Increase While Royal Mail Falls Short on Christmas Delivery Service
Nearly 60 million letters, packets and parcels are handled by Royal Mail each day and the target is to achieve a 93% next day success rate for first-class mail. Mark Higson of Royal Mail told the BBC; "Royal Mail's target for next-day delivery of first class mail is challenging, and we are disappointed on behalf of our customers to have narrowly missed hitting it in the autumn. Our postmen and women remain determined to deliver the best possible service to our customers." He went on to blame the scale of changes Royal Mail was bringing in to modernise and streamline deliveries saying these led to a "temporary adverse impact" in some areas.
Robert Hammond, of watchdog Consumer Focus, told the BBC that: "While consumers might see a dip in performance where modernisation is happening, this should not be for an extended period as appears to be the case in some areas. Some postcode areas have been failing for a number of quarters in succession, and this is an issue which Royal Mail and the regulator Ofcom need to keep a close eye on."
Royal Mail are due to face questions from the Commons Business Committee next week about their response to the Ofcom regulator's intentions to scrap existing price caps on the price of first-class stamps and increase the price cap on second class stamps to a reported 55p (currently 36p). Ofcom announced in October that the removal of these limitations were intended to make sure UK consumers could continue to receive from an affordable postal service six days a week at a single universal price.
Royal Mail reported a £120 million loss for its letters business during 2010 due to increased competition and lower demand for its services. This means an inflation busting price increase for postage stamps is more than likely this year. However, one of the basic rules of economics tells us that a real terms price increase will lower demand still further which could make Royal Mail's problems regarding falling demand even worse.
The current cost of a first-class stamp for standard size letters is 46p and a standard second class letter costs 36p. Royal Mail is expected to announce April 2012's price increase in March.
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