Royal Mail says it loses 6p for every stamped letter

First-class stamp prices will rise by 2p to 36p, while second-class stamps will go up by 3p to 27p.

The Royal Mail said stamp prices would still be among the lowest in Europe after the increase comes into effect.

Postal watchdog Postwatch said the increase was "above the level of inflation", which it was "not happy about", but "the rise was expected".

Competition for business mail from rivals, electronic communications and the wider communications market is increasing Luisa Fulci Royal Mail

Stamped mail makes a loss of around 6p per letter or packet - a total of �178m last year.

And the Royal Mail said it would continue to be loss-making.

The Royal Mail's director of commercial pricing and policy, Luisa Fulci, outlined the challenges faced by the organisation.

"For many years profits from business mail have funded stamped mail losses - but it's getting harder all the time to maintain that subsidy as competition for business mail from rivals, electronic communications and the wider communications market is increasing while mail volumes fall," she said.

Business discounts

Business customers who use franking machines are to continue receiving a discount against the price of a stamp.

The cost of a franked, standard first-class letter will increase by 2p from 32p to 34p in April.

And a standard second-class franked letter will rise 2p from 22p to 24p, increasing the discount for second-class franked mail discount from 2p to 3p.

And, for the first time, medium-sized businesses will receive discounts on volume.

According to the Royal Mail, this means the more they post, the lower their postage bill will be.