How to Cost of Stamps Has Risen Over the Years

Most of us have the need to buy and use stamps from time to time. We’re also used to the idea of the prices rising over time in order to keep up with inflation and the demands of the business.

However the latest price rises indicated by Royal Mail back in April 2012 were undoubtedly among the highest rises ever experienced by those buying stamps to send letters and parcels. On the 30th April 2012 someone buying a first class stamp would end up paying 14p more than they did the day before. On the 29th April the price was a mere 46p, but on the 30th it went up to 60p. This is for a basic first class stamp, suitable for posting a basic letter or card below a certain size and thickness. At the same time the cost of buying a standard second class stamp also went up by 14p, from 36p to 50p.

What does this rise mean as a percentage?

In terms of the price of a first class stamp, the percentage rise is a whopping 30%. As far as the second class stamp is concerned, the price rise equated to just less than 39%. As you can see, even though the pence amount seems quite small in each case, it actually equates to a large percentage increase – the largest one in the last decade.

This is because Ofcom (the regulator that oversees the prices and processes used by Royal Mail) has granted Royal Mail permission to decide on the prices it sets for some of its services. Even though the price rises have been quite high, they are still below the maximum level Ofcom set as a ceiling.

How much has the price of a stamp gone up over the past ten years?

It is quite interesting to look back over the last decade to see how much cheaper stamps were in the past. Of course it should be remembered that prices for everything rise over time, owing to inflation.

Ten years ago we were paying 27p for a first class stamp. This means the price of the stamp has more than doubled in ten years. At the same time a second class stamp would have cost you 19p, so the price for this has more than doubled as well.

It’s interesting to look at the gradual rise in prices since the year 2000. The prices remained fairly steady for the first couple of years into the new century, before starting to rise around 2002-03. The price rises were fairly small until around 2005, when they started to rise more steadily. However the current year is undoubtedly the one people will remember as having the biggest price rise in more than a decade.

Are the price rises justified?

While these rises might seem extreme, it is relatively well known that Royal Mail is losing a significant amount of money on their letters business. The price rises should help it to stall these losses and still provide the service we all expect them to deliver.

So even though the prices have risen by a large degree, there are reasons behind the rises. Royal Mail will continue to lose money for the foreseeable future, but if they can stall their losses they will be in a better financial position than they are at the moment.

The next big step for Royal Mail is to sell off part of its business. According to Ofcom as much as 90% of the business is allowed to be sold, so the future is an interesting one to look ahead to.