The Hertfordshire-based company, which is the UK distributor for Chinese paper manufacturer and Asia Pulp and Paper (APP) subsidiary Gold East Paper, said that the increase would take place with immediate effect.

Arco claimed that recent increases in raw material prices were "well beyond the level" which it could hope to absorb.

Eik Lim, head of overseas direct sales at APP China, said: "All of our customers are aware of the massive increases in raw material, and while we have made every effort to absorb these costs, we are no longer able to do so. It remains highly likely that paper prices will continue to rise during the course of 2010."

The BPIF has recently hit out at widespread plans by merchants to increase the price of paper by 8%-12% and demanded that the rises be better justified.