USPS Proposes Rate Increases for Next January

WASHINGTON, DC—The United States Postal Service (USPS) announced proposed price changes, including an 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.

Standard flats are slated to increase 6.1 percent and catalog/magazine mailers could see a 5.9 percent postal rate increase, on average. The 5.9 percent includes a 4.3 percent exigent price increase on top of the 1.6 percent increase that is capped by the rate of inflation.

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. 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, 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 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.”

Except in 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 PRC will review the prices before they become effective Jan. 26, 2014, and must agree the prices are consistent with applicable law.