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Royal Mail to raise customer prices and cut costs as inflation soars

The UK's largest postal and courier service claimed it's now at a "crossroads".

Emily Sergeant Emily Sergeant - 19th May 2022

The Royal Mail has said that it will have to raise prices for customers and cut costs amid the growing cost of living crisis.

After it was confirmed by the Office for National Statistics (ONS) yesterday that UK inflation has now risen to 9% – which is the highest the figure has been for the last 40 years – with prices hiked across a broad range of everyday goods and services during April, the Royal Mail has issued a statement this morning warning that it sees “significant headwinds” from rising costs – including wages, energy, and fuel.

In an attempt to bolster its position, the postal and courier service revealed that it aimed to make cost savings of £350 million over the course of its current financial year.

Today’s statement on price rises comes after the group already notably hiked the cost of posting letters by an average of around 7%, and parcel prices by an average of about 4% – which took the cost of a first-class stamp to 95p, and a second-class stamp to 68p.

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But the Royal Mail says it still sees numerous threats from rising costs ahead, and claimed that it is now at a “crossroads”.

Explaining the current situation in its most-recent results statement, the Royal Mail said: “We are now at a crossroads.

“We need to deliver the benefits from change more quickly to deliver sustainable growth. We have made significant operational change already, but this needs to translate into real efficiency savings which deliver a financial benefit next year and beyond.

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Read more: Inflation rises to 40-year UK high of 9% amid cost of living crisis

“Delivery of our existing agreements and the successful transition into the next agreements, as part of the current negotiations with the CWU, will be key to future profitable growth. We have made a substantial pay offer to our people which will enable the change we need to remain competitive, grow and secure their jobs for the future.

“Our market is changing quickly, and agility in our response is key.”

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The UK’s largest postal and courier service claimed it’s now at a “crossroads” / Credit: Royal Mail

Speaking more on the need to raise prices and cut costs going forward, Simon Thompson – Chief Executive at the Royal Mail – added: “As we emerge from the pandemic, the need to accelerate the transformation of our business, particularly in delivery, has become more urgent.

Read more: Royal Mail to cut 2,000 jobs to ‘reduce costs’ during the COVID-19 crisis

“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.”

He added: “Our focus now is to work at pace with our people and our trade unions to reinvent this British icon for the next generations, so that we can give our customers what they want, grow our business sustainably and deliver long-term job security for our great team.

“We have no time to waste.”

Featured Image – Royal Mail