The Royal Mail has announced a record rise in the price of stamps effective from 30 April 2012. The cost of a first class stamp will rise from 46p to 60p and second class stamps will go up from 36p to 50p.
The Royal Mail claim that the current prices are unsustainable due to a reduction in volumes as more people are using email rather than sending letters in the post. The Royal Mail has reported losses of approximately £1 billion over the past four years and the news follows recent announcements that the Conservatives will be looking to privatise the Royal Mail in 2013.
Our view on the recent price rise is simple: we advise our clients to go out and buy stamps before the price rise on 30 April and to take advantage of discounts by companies such as Superdrug who currently offer a 5% discount (till 10 April).
With regards to the economy, there is now a significant risk of inflation. The recent increase in the cost of postage combined with rising oil prices and utility bills will mean that consumers will have less disposable income and make the threat of a double dip very real. Increased inflation will affect savers and will also put pressure on the Bank of England to raise interest rates which will further damage the economy.