Postage on second class parcels capped by Ofcom

Charges for sending second class large letters and small parcels will be capped, the regulator Ofcom has confirmed.

Price increases on stamps for large letters and small parcels up to 2kg will be capped in line with CPI inflation to 'protect small businesses and vulnerable customers.'

The decision will provide consumers with the same level of protection from price rises as on second class standard size letters.

Ofcom said: "The safeguard cap is designed to ensure that consumer expenditure on these items remains affordable, while at the same time allowing Royal Mail flexibility in its pricing decisions, consistent with our overall approach of price deregulation."

Households spend an average of 50p a week on postal services, with half this amount spent on large letter, packet and parcel products, research from the Office of National Statistics (ONS) found.

The price of first and second class stamps rose in April after Ofcom granted Royal mail greater freedom to set its own prices and secure the financial sustainability of its service. Ofcom had said that Royal Mail was at 'severe risk' as consumers and businesses switch to other electronic means of communication such as email and mobile phone.

The cost of sending a large letter weighing up to 100g by second-class post rose from 58p to 69p, while small parcels up to 2kg rose depending on weight.

Second class stamps also rose by 39 per cent from 26p to 50p, with a safeguard cap ensuring it will not exceed 55p in the next seven years. 

Its decision to extend the safeguard cap to second class large letters and small parcels follows a consultation on how best to ensure that consumers, small businesses and competition are protected.

A report by watchdog Consumer Focus found that physical mail is still valued by consumers, although use is declining. It found that small businesses in particular rely more heavily on postal services than residential consumers.

According to the report, residential consumers might be willing to accept a reduced number of postal deliveries during the week, providing the number of pick up points increased, opening hours were extended and they were provided with more convenient locations to collect parcels.

• Standard 'Letters' are items up to a length of 240mm, width 165mm, thickness 5mm, and weighing no more than 100g.
• 'Large Letters' are items larger than a Letter and up to a length of 353mm, width 250mm, thickness 25mm, and weighing no more than 750g.