German regulator rejects request for postage stamp price hike

BERLIN (Reuters) -Germany's federal network regulator has rejected a request by postal service operator Deutsche Post to raise the price of a postage stamp to cover rising costs, the agency said on Monday.

"We recognise the challenging environment in the letter and parcel business, but according to the data presented, letter prices are sufficient to cover unit costs," said Klaus Mueller, president of the Bundesnetzagentur.

In May, Deutsche Post had applied to the regulator to lift a price cap currently in place until the end of 2024, with the goal of raising its postage stamp prices next year.

Deutsche Post called the decision "wrong", saying the inability to raise prices would massively slow its efforts to reach climate-neutrality.

"The decision exacerbates the cost pressure in the letter mail sector," board member and head of the Post & Paket unit Nikola Hagleitner said in a statement. "Investments in a sustainable universal postal service are hardly possible under these conditions."

The regulator's decision comes after German consumer prices rose by 6.5% on the year in July, according to preliminary data.

Deutsche Post said the cost of a stamp in Germany - 0.85 euros ($0.9331) for a standard letter - was below the European average despite relatively high salaries. It argued that forecasts from 2021 on which current pricing is based were no longer accurate.

"Deutsche Post was unable to prove that reduced mail volumes led to cost increases per letter item - the average unit costs are even slightly below the 2021 forecast," the regulator said in a statement.

($1 = 0.9109 euros)

(Reporting by Matthias Inverardi; Writing by Friederike Heine; Editing by Rachel More and Sonali Paul)