Royal Mail has today announced that it will need to raise prices and slash its costs in order to offset soaring inflation.

This comes as an "uncertain" outlook for the economy hits the group, as it posted a rise in annual earnings.

Yesterday it was announced that inflation has risen to 9% in April, with it rising at the fastest rate in 40 years.

The group cautioned over “significant headwinds” as it faces higher wage demands as well as raised energy and fuel costs.

It is cutting costs by more than £350 million to help mitigate the hit, but said it would also have to look at price increases.

How much will Royal Mail prices go up?

The group has already hiked the cost of posting letters by an average of around 7%, and parcel prices by an average of about 4%.

Currently, it is unclear how much further prices will be raised.

Royal Mail prices 2022

UK Standard

  • Letter: 1st class 95p, 2nd class 68p
  • Large Letter: 1st class £1.45, 2nd class £1.05
  • 250g: 1st class £2.05, 2nd class £1.65
  • 500g: 1st class £2.65, 2nd class £2.15
  • 750g: 1st class £3.30, 2nd class £2.70
  • Small Parcel 2kg: 1st class £4.45, 2nd class £3.35
  • Medium Parcel 2kg: 1st class £6.95, 2nd class £5.35
  • 10kg: 1st class £7.95, 2nd class £6.95
  • 20kg: 1st class £12.95, 2nd class £10.45

View all Royal Mail prices and services here.

It came as the group reported an 8% rise in underlying operating profits to £758 million for the year to the end of March.

On a reported basis, pre-tax profits fell 8.8% to £662 million.

The group said it was at a “crossroads” in its overhaul as parcel delivery becomes even more important.

Royal Mail warns of parcel delivery price hikes in the UK

Simon Thompson, chief executive of Royal Mail, said: “As we emerge from the pandemic, the need to accelerate the transformation of our business, particularly in delivery, has become more urgent.

“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.”