Who decides the price of a stamp?

[TrueBlueTerrier]

https://www.fool.co.uk/mywallethero/you ... f-a-stamp/

The price of stamps has risen every year since 2015.

Today, sending a standard sized letter using first-class post sets you back 85p and sending a large letter costs £1.29. For second-class post, it’s 66p and 96p respectively. But while price hikes seem to be one of life’s inevitabilities, who actually sets the price of a stamp in the UK?

Who sets the price of a first-class stamp?
Royal Mail is in charge of setting the price of first-class stamps, but that’s not always been the case.

Up until around nine years ago, communications regulator Ofcom set the price of all stamps in the UK. In 2012 the rules changed and the price of a first-class stamp was deregulated, meaning Royal Mail got the right to decide what to charge.

Why the change? Essentially, it was to help Royal Mail become more efficient and profitable as people turned away from snail mail and used tools like email instead.

Who sets the price of a second-class stamp?
Confusingly, it’s not Royal Mail.

In order to safeguard an affordable ‘universal postal service’, Ofcom still regulates the price of second-class stamps. The price is capped and only ever rises in line with the Consumer Price Index (CPI).

Will first-class stamp prices rise again?
Based on what’s happened in the past, probably. But price changes are an annual event, so we don’t have to worry about it just yet.

Giving Royal Mail the freedom to set first-class stamp prices along with a cap on second-class stamps was for a set period of seven years. This period officially ended in 2019.

However, Ofcom reviewed its deregulation framework in 2017 and decided that the framework was working well enough to justify an extension. As a result, Royal Mail will remain in charge of the price of first-class stamps. Second-class stamps will continue to rise annually according to the CPI.

Ofcom still keeps a watchful eye on exactly what Royal Mail is doing when it comes to the price of first-class stamps. The regulator also closely monitors Royal Mail’s performance to make sure the company is meeting its targets.