Postcomm’s decision to relax price controls for 2011-2012 will allow Royal Mail to raise an extra £100m. However, this has flown in the face of strong opposition from the UK direct mail sector.

Danny Narey, operations director at Adare, said the price increases were not something that the company could absorb and therefore the concern was how they would impact the end user.

"I can understand why Royal Mail has done this but the only sympathy I can extend is that they were the incumbent of the universal service, something they could not change."

Postcomm’s decision is "self-defeating," he added.

During its November consultation, Postcomm received 80 responses, including a slew of direct mail printers warning against the price rises.

Lance Hill, group sales and marketing director at 4DM, said he was not surprised by the decision, adding it "had to happen".

He said: "Royal Mail is in such dire straits and this was something it had to do. It is bad news and something that has been responded negatively to by our clients."

According to Hill, the difficulty lies in working out how the move will impact on the company’s clients’ use of direct mail.

"I will be tasking our sales staff and sitting down with customers to discern what will have to change as a result of these increased prices".

Judith Donovan, CBE and chair of the Strategic Mailing Partnership, said the decision was evidence that Royal Mail "had nowhere else to go".

She added: "Of course the price rise will hurt but I for one will be delighted if it means clients and agencies start to work much harder at what makes mail work.

"If increased prices mean buyers actually look at their ROI and therefore require that their packs work harder, then hallelujah: we might actually see a renaissance in powerful, response pulling, measurable, accountable and profitable mail."

Howard Matthews, chief executive of mailing house NEMC, said he was "extremely worried" that Royal Mail is relying on bulk mail customers to increase their annual budget to cover Royal Mails cash-flow difficulties "when efficiency savings could well have had a far better effect". 

He added: Should Royal Mail customers choose not to increase their annual spend on postage then I really fear for our partners and DMA members.

The knock on effect to the print industry and all of our suppliers will be catastrophic. It is going to be a very nervous wait, to see which way Royal Mail customers will jump."

Royal Mail is required to give 90 days’ notice of price increases, so any proposed price hikes could come into force from 24 May at the earliest.

Defending the decision, a spokesman said: "Royal Mail is doing all it can to modernise its operations to reduce its costs, improve efficiency and delivery of the services our customers rely on."