An Post has been given permission to raise the cost of posting a letter to other EU states. From January 1st postage to Britain will increase, on average, by 30 per cent while postage to the rest of the EU will be 16 per cent more expensive.

The Commission for Communications Regulation (Comreg) yesterday approved a range of changes to An Post's international pricing policy.

As part of the new system, the cost of posting a standard letter weighing less than 50g to Britain will increase from 41 cents to 50 cents. The price of sending a letter weighing up to 25g to another EU state will rise from 44 cents to 57 cents.

The cost of posting a letter weighing between 26g and 50g to a continental EU state will remain unchanged at 83 cents.

At the same time, the price of sending a letter weighing between 26g and 50g to the US, Australia and elsewhere will fall by eight cents to 83 cents.

In a statement, Comreg said customers who did not wish to pay the new prices would have the option of using An Post's economy service, a slower postal system.

It is understood the changes announced yesterday will have a negligible impact on inflation, which is already expected to rise next month following changes made in the Budget

The postage move has come at the request of An Post, which is seeking to stem losses in its international division. The firm made a €14 million loss on its international business last year.

The new price increases will not be sufficient to cover this shortfall, but Comreg has warned that the gap must be filled by cost reductions rather than further price rises. The regulator is likely to push An Post to seek a renegotiation of the international agreement which governs cross-border postage.

"The agreement, which is currently being reviewed, tends to favour countries with high prices and large volumes such as Germany. Comreg is anxious that An Post will seek a better deal for Ireland while maintaining current levels of service," the regulator said.

A consultation on the issue will be initiated shortly.

In a separate development, Comreg is to investigate prices charged by An Post parcel company, SDS. The company, which is not required to win Comreg's approval before making price changes, has raised the cost of posting parcels by up to 38 per cent over the past two years.

The proposed investigation will consider how well SDS complies with tariff legislation and may result in "a programme to remedy deficiencies", according to the regulator.