Royal Mail to raise stamp prices in March: how to beat the increases

Royal Mail is hiking the price of 1st class and 2nd class stamps by up to 9p next month.

The price rises will apply to stamps for posting standard and large letters from 23 March - just under 12 months since customers were hit with a record-breaking 3p rise.

Here, we explain what prices are changing, why Royal Mail has made the move and what you can do save on postage costs.

How much will 1st class and 2nd class stamps cost?

The cheapest 1st class stamp for a standard letter up to 100g will go up 6p, from 70p to 76p.

That's a rise of 8.57%, or almost five times January's annual rate of inflation as reported by the Office for National Statistics.

The new prices will see a 2nd class stamp for ordinary-sized letters up to 100g climb 4p, from 61p to 65p.

This is a smaller rise at 6.15%, but that's thanks to the 65p cap imposed by Ofcom on 2nd class stamps.

Meanwhile, stamps for large 1st class letters with the same weight will go up 9p, from £1.06 to £1.15 - a 7.82% increase.

Stamps for large 2nd class letters in the same category will rise 5p, from 83p to 88p - a 5.68% lift.

Why is Royal Mail hiking prices?

Royal Mail says the rise is down to a tough market, an increased likelihood of running at a loss in 2020-21 and the desire to invest £1.8bn to turn itself around.

It says it's striving to reduce the impact on its customers, but the rises are necessary to ensure it can sustain its 'one-price-goes-anywhere' within the UK service.

Royal Mail has compared itself with other European postal services and says that its 1st class stamp for a letter up to 100g is 29p cheaper than the average continental equivalent at £1.05.

How stamp prices have changed since 2015

Last year's stamp price increase was the highest rise in five years with both 1st and 2nd class stamps both going up 3p to 70p and 61p, respectively.

But this year's rise is higher still with a 6p gain on 1st class and 4p on 2nd class, held back by the Ofcom cap.

The graph below shows how stamp prices have soared over the past five years.

How to save money on postage costs

Royal Mail continues to be regarded as the cheapest way of sending cards, letters and small parcels weighing less than 1kg.

But it makes sense to compare discount courier services such as MyParcelDelivery.

One way to beat the Royal Mail rise is to buy stamps before 23 March. Royal Mail has confirmed that generic stamps can continue to be used even after price rises.

Retailers do stock up in advance of anticipated extra demand, but they don't want to encourage profiteering and will question extremely large single purchases. Rationing was brought in by Royal Mail in 2012 ahead of a 30% rise in prices and one man spent £3,600 on 10,000 2nd class stamps in Derby.

There are websites offering packs of stamps which effectively give a bulk discount for example at Viking Direct, a pack of 100 2nd class stamps costs £61, meaning each would stay at today's prices of 61p and giving a total saving of £4.

At the Post Office a sheet of 100 1st class stamps is £70, so one costs 70p and means you pay today's prices, but you have to ensure delivery charges don't wipe out any meaningful saving.

• Find out more: 50 ways to save money

Editor's note: This story has been updated and references to the price rise being the second in a year taken out. The price rises are an annual but this one is just coming in a bit earlier.