Australia Post's proposal to increase stamp prices has progressed with no objection from the consumer watchdog.

It means the cost of an ordinary small letter will rise from $1.20 to $1.50 in the change slated for April 3, subject to the process being finalised.

The price of large letters up to 125 grams will move from $2.40 to $3, and $3.60 to $4.50 for large letters between 125 grams and 250 grams.

As the use of letters declines Australia Post said the increase would help address the rising cost of delivery.

"Australian households only receive two letters on average each week and letter volumes are expected to halve in the next five years," a statement from Australia Post said.

"On average, for households that regularly send letters, the increase to $1.50 will cost them about $4.50 extra per year."

There will be no change to the price of concessional stamps at 60 cents or to seasonal greetings stamps at 65 cents.

The Australian Competition and Consumer Commission (ACCC) confirmed on March 18 it would not object to the proposal "on a cost-recovery basis".

However it did make recommendations to improve Australia Post's financial modelling.

"Our recommendations seek to improve how Australia Post incurs and accounts for the costs of its reserved letter services, so consumers are not paying more for stamps than they should," ACCC commissioner Anna Brakey said.

It comes after reforms were announced to modernise the postal service in light of a $200 million annual loss reported in August 2023 - its first since 2015.

The changes proposed include cutting regular letter delivery from daily to every second day as demand for the service plummets.

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