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The Royal Mail has said said stamp and parcel prices will need to go up again as soaring inflation means it has to charge more.

Just last month the price of first-class stamps rose by 10p to 95p, while second-class stamp prices went up 2p, to 68p.

But today the Royal Mail warned that it faced “significant headwinds” from higher wage demands, surging energy and fuel costs.

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

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

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

But this is a problem for the Royal Mail as it has to maintain its ‘universal service’.

This is the promise that it costs consumers the same price to send a letter to any address in the UK, six days a week.

The Royal Mail is also grappling with the fact Brits send fewer letters than they used to – meaning it makes less money.

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.

“The last two years has shown us all how quickly customer needs can change.

“We have no time to waste.”

Last week Royal Mail acknowledged that its performance “needs to improve” after admitting that a fifth of items sent first-class are no longer arriving the next day .

The delivery giant aims to deliver the majority of first class letters the following day including Saturdays – and traditionally has met this target.

However, it’s now said one in five 95p-a-stamp letters are not landing through letterboxes within 24-hours due to Covid.

Royal Mail said its service standards had been “materially impacted” by the pandemic and workers self-isolating over the past year.

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