The price of a first class stamp will rise by 10p to 95p as Royal Mail seeks to cover higher delivery costs while the number of letters being sent falls.
Second class stamps will also increase by 2p to 68p, with the new prices coming into effect on 4 April.
Royal Mail said it was having to deliver to a growing number of addresses, which was adding to costs.
Letter volumes have fallen by more than 60% since their peak in 2004-05 and by about 20% since the pandemic began.
Postmen and women deliver about seven billion letters in total each year, said Nick Landon, chief commercial officer at Royal Mail, but the number of addresses they have to deliver to has grown by around 3.5 million since 2004, when letter volumes were at about 20 billion a year on average.
“We need to carefully balance our pricing against declining letter volumes and increasing costs of delivering to a growing number of addresses six days a week,” he said.
“As customer needs change and we see a greater shift from letters to parcels, it is vital that the universal service adapts to stay relevant and sustainable.”
The increase in stamp prices comes as many households are being hit by rises in the cost of living, with energy bills, fuel prices and food costs all going up.
Mr Landon said Royal Mail understood that businesses and households were “finding it hard in the current economic environment”, and said the company would “always keep our prices as affordable as possible”.
Coronavirus lockdowns led to a sharp reduction in letter volumes, and Royal Mail lost £180m in revenue in the first half of 2020.
In November 2020, the company said revenue from parcel deliveries had surpassed letters for the first time, fuelled by a surge in online shopping during the pandemic.