Britons will have to pay 30% more for a first-class stamp to help protect the UK universal postal service, in the latest move toward a privatisation of Royal Mail now expected in early 2014.
Royal Mail was given new price-setting powers by industry regulator Ofcom.
It said the price for a first class letter would rise to 60p from 46p on April 30, as it seeks to turn around its loss-making letters business.
A second-class stamp for a standard letter will go up to 50p from 36p.
"We know how hard it is for households and businesses when our economy is as tough as it is now. No-one likes to raise prices in the current economic climate. But, regretfully, we have no option," Royal Mail chief executive Moya Greene said.
"The Ofcom approach to regulation is incredibly significant. This gives the company the commercial freedom that we need to have in order to restore the financials and to secure the universal service for the UK," she said.
The Communication Workers Union, which represents non-managerial staff at Royal Mail and the Post Office, said the price hikes were a natural progression towards full competition and privatisation of postal services.
The rise came as a monthly survey from polling company YouGov showed inflation expectations eased to 2.7% this month from 2.8% in February. Expectations for annual inflation over the next 5-10 years were stable at 3.4%.
The news followed a decision by the European Commission last Wednesday to approve government plans to take on Royal Mail's hefty pension fund in a bid to improve its safety for employees, and attract private sector investment.
Royal Mail more than trebled operating profit to £67m in the six months to September, as its European express parcel service GLS, and its post office branch network offset a loss at its letters and parcels division.
Ofcom gave Royal Mail new price-setting powers as part of a seven-year framework designed to protect the universal postal service amid declining volumes and sales.
Royal Mail said the changes were vital to making the service, which costs £6.7 billion a year to run, sustainable. The service agreement ensures consumers get a universally-priced postal service six days a week.
Royal Mail made a £41m operating loss on letters and parcels in the six months to September 25. In the last four years it has made a loss on its core mail of almost £1 billion. Volumes have fallen 25% in six years and were expected to decline about 5% annually for the foreseeable future.
"Huge changes are affecting the postal industry, as consumers and businesses switch to other means of communications such as text, email and online services," Ofcom said, adding it could intervene if the new regime did not work.
Ofcom said Royal Mail must continue to provide competitors access to its delivery network and will be able to set a wholesale price for doing so. This will be subject to rules regarding the margin between its wholesale and retail prices.
Last week, Britain's second largest postal firm TNT Post said it was to trial deliveries in west London in April as it steps up ambitions to rival Royal Mail.
