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Cost of stamps to rise each year with inflation

THE cost of stamps and other basic postal services could rise each year as plans are being made to link the prices to inflation for the first time.

The first of the proposed inflation-linked price hikes could come as early as next year.

The proposals could mean an annual increase in the price of post for the foreseeable future as the cost of living in Ireland has risen every year in the last 20, excluding 2009.

Prior to a price hike brought in this month, the cost of a standard letter had not risen for six years.

But fulfilling the Universal Service Obligation – which requires An Post to collect and deliver post to every household and business in the country at least once a day, five days a week – lost the semi-state body €60m in 2012 alone.

It says this is "clearly unsustainable."

There are no plans to reduce this service but a spokesperson said "the pricing just isn't right".

Yesterday, An Post issued its financial results for 2012, reporting its first loss since 2003.

The national postal service has been hit by falling volumes of post, down by 27pc in the last six years, as a result of the recession and consumers switching over to electronic forms of communication.

The Irish Independent has learned that the regulator ComReg is now proposing that charges for the postal services An Post is obliged to perform under the Universal Service Obligation, be linked to the Consumer Price Index – which measures the cost of living in Ireland and shows rates of inflation or deflation in many sectors.

There will be a consultation with post-office stakeholders later this year, and the arrangement could be introduced by next year.

Incentive

It will include some form of "incentive for efficiency" if inflation is 2pc. This means that An Post prices might only go up by half of this, to encourage efficiency at the company.

This calculation will be set and applied for a number of years, and then reviewed.

This month An Post put up prices on basic stamps for the first time in six years. Prices for a standard letter rose by just under 10pc, from 55c to 60c.

But An Post says the cost of posting a standard letter in Ireland is still the third lowest in the EU, where the average cost is 70c.

Denmark is the most expensive country, at 90c, while in Spain this service costs only 45c.

An Post to cut jobs

Irish Independent