German postal service to hike postage rates by 10.5%

Germany's postal service has won permission to raise postage costs for postcards and letters by around 10.5% starting early next year, Germany's Network Agency regulator said on Wednesday.

Deutsche Post had cited higher costs as the reason for seeking the price increases. The postal service is required to deliver mail everywhere in Germany, including remote areas which involve lengthy travel times.

The exact stamp price for each type of letter has not yet been decided, although the German government has urged keeping the cost for a standard letter below €1 ($1.12).

Industry experts said they anticipated that the price of sending a standard letter within Germany could rise from €0.85 to €0.95 ($0.95 to $1.06).

The increase was significantly less than what Deutsche Post had requested. A company spokesman said he was "astonished" by the decision and criticized the move to keep postage rates relatively low.

Deutsche Post is a division of global logistics giant DHL Group, which grew out of the formerly state-owned German postal service. But domestic mail delivery is now only a small - and generally unprofitable - part of the company's business.

"The result and [underlying] assumptions are difficult to understand in view of expected wage increases, shrinking letter volumes and high investment requirements," he said.

He said postage for a standard letter in Germany is currently 43% below the EU average: "Deutsche Post will now thoroughly examine the Federal Network Agency's decision and present its view of the matter to the authority."

As recently as 2012, the postage for a standard letter was just €0.55.