THE UNITED STATES POSTAL SERVICE RECENTLY ANNOUNCED PROPOSED PRICE CHANGES FROM 46 CENTS TO 49 CENTS. THE PROPOSED CHANGES WOULD GO INTO EFFECT IN JANUARY 2014.
The United States Postal Service today announced proposed price changes, including a postage increase in the price of a First-Class Mail single-piece letter from 46 cents to 49 cents. The proposed changes, which would go into effect in January 2014, are intended to generate $2 billion in incremental annual revenue for the Postal Service.
Highlights of the new single-piece First-Class Mail pricing, effective Jan. 26, 2014 include:
- Letters (1 oz.) — 3-cent increase to 49 cents
- Letters additional ounces — 1-cent increase to 21 cents
- Letters to all international destinations (1 oz.) — $1.15
- Postcards — 1-cent increase to 34 cents
Stamp prices have stayed consistent with the average annual rate of inflation of 4.2 percent since the Postal Service was formed in 1971.
Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted as part of a filing to the Postal Regulatory Commission (PRC) scheduled to take place Sept. 26.
The Governors of the Postal Service voted Sept. 24 to seek price increases above the typical annual increases associated with changes in the Consumer Price Index (CPI).
In a letter disseminated to customers today, Board of Governors Chairman Mickey Barnett described the “precarious financial condition” of the Postal Service and the “uncertain path toward enactment of postal reform legislation” as primary reasons for seeking price changes above the CPI increase. He also indicated that the price adjustment above the CPI increase is necessary in order to ensure that the Postal Service will be able to maintain and continue the development of postal services of the type and quality which America needs.
“Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” said Barnett in the letter. “However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”
Except in exceptional or extraordinary circumstances, postage price increases are capped at the rate of inflation as measured by the CPI-U. The Postal Service is filing a price increase above CPI-U due to extraordinary and exceptional circumstances which have contributed to continued financial losses. The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year, and has an intolerably low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.
Emphasizing the Postal Service’s dire straits, the proposed increase is well above the typical annual hike tied to the Consumer Price Index, which rose 0.1 percent in August on a seasonally adjusted basis, and 1.5 percent over the 12 months to August, before seasonal adjustment.
The USPS, which receives no tax dollars for operating expenses, said it had a net loss of $15.9 billion last fiscal year and expects a loss of about $6 billion in the current fiscal year. The USPS is funded by the sale of postage, products and services.
Even as it seeks another price increase, the USPS is studying whether stamps have any future at all. It has hired a futurist, Faith Popcorn’s BrainReserve, and is paying the group $565,769 to examine ways to stem the decline in stamp use, according to documents acquired by Federal Times, which provides news for federal managers.