Postage fees will rise by as much as 25 per cent in October, Hongkong Post announced yesterday.
It is its first price increase since April 2002, and comes after the city's post office began to incur operating losses in the financial year from 2011.
Founding president of the Hong Kong Small and Medium Enterprises Association Wilson Shea Kai-chuen said his members would be among the worst hit.
"The percentage increase is too high," he warned. "There are often no alternatives to using the postal service, such as when sending out bank cheques, receipts and catalogues. It will increase the overall costs for us."
Stephen Kwok Chun-tong, president for the association, feared the rise would trigger increases in other services.
Hongkong Post insisted in a statement yesterday: "The postage rates in Hong Kong will remain relatively low after the adjustments … and the quality of our postal service is very high."
The cost of a stamp for a local letter will rise 3 cents to HK$1.7, while small parcels will cost HK$55 to post locally, up by 16 per cent from $47.
Postage rates for Air Mail will rise by 5 to 7 cents, depending on the mailing zone.
In December, other fees will rise. The cost of renting a private postal box will then increase from HK$320 to HK$400. Registered post and recorded delivery will also go up.
The increases will bring in an additional HK$340 million a year. But Hongkong Post is expected to continue incurring operating losses.
The Post Office, a self-financing government department managed independently as a commercial Trading Fund venture, has seen a deteriorating financial performance since 2007, before beginning to incur operating losses two years ago.
While overall mail traffic has led to a 22 per cent increase in operating revenue in the past five years, the numbers have not been enough to offset escalating operating costs - wages and air transport, for example.
"The Post Office Trading Fund will not be financially viable in the medium term if timely adjustments are not made to the principle postage rates and some of the postal fees," a spokesman from Hongkong Post said.
The government's Commerce and Economic Development Bureau expected the fee increase to lead to a reduction in mail traffic, "which may lessen the burden on the environment".
Chief Executive Leung Chun-ying approved the price rises on Tuesday.
They will still go before the Legislative Council as the Post Office (Amendment) Regulation 2013.