Recent price increases and the lack of a proper postcode system underlie a surprising lack of growth in mail volumes at An Post, a report written for the European Commission has concluded.

The report contrasts the growth in the economy with the sluggish growth in mail volumes in the Republic.

The report says that there may be "unrealised potential" for further growth in the postal market here.

The European lobby group, the Free and Fair Post Initiative, recently found Irish postal rates to be the sixth most expensive in the EU.

The price issue is also cited in the latest report as a possible explanation for sluggish growth in mail volumes.

"The Irish economy has grown very strongly in the last six years, yet growth in the letter post volume has fallen behind to a degree that seems surprising," claims the report.

"Looking at member states with comparable GDP per capita, it seems possible that there is an unrealised potential for further letter post growth in Ireland," it adds.

The report was produced by German consultants WIK Consult and was forwarded in recent months to the European Commission's Internal Market division.

The report is entitled Main Developments in the European Postal Sector. It looks at developments across the EU states, including the Republic.

The report also finds that Ireland has a very high number of post offices for its population size. It finds there are four "postal outlets" per 10,000 inhabitants in the Republic, whereas there are only about 1.3 postal outlets in Malta and Belgium per 10,000 inhabitants.

However, the report concedes that population density may help tp explain some of this variance.

The report offers two reasons for the "slow rate of mail growth" in Ireland.

One is the lack of a well constructed postal code system, which it says facilitates the development of high level direct mail services.

Secondly, it says An Post has increased its tariffs in real terms by more than 4 per cent per year and these increases may have "deterred mailers".

Ireland does not currently have a fully developed postcode system like Britain.

While there are some postal districts, the system is not able to identify specific homes and premises as does the British system.

A fully developed postcode system would allow for faster delivery and more efficient sorting of mail, according to industry experts.

In a recent parliamentary reply, however, the Minister for Communications, Noel Dempsey said that he was now seriously considering introducing a postcode system.