The United States Postal Service announced on September 25th, the 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 produce $2 billion in incremental annual revenue for the Postal Service.
Highlights of the new single-piece First-Class Mail pricing, effective January 26, 2014 include:
- Letters (1 oz.) — 3-cent rise to 49 cents
- Letters additional ounces — 1-cent rise to 21 cents
- Letters to all international destinations (1 oz.) — $1.15
- Postcards — 1-cent rise 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 spread to consumers, 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 pointed out the price adjustment above the CPI increase is necessary to ensure the Postal Service will be able to maintain and continue the development of postal services of the type and quality which America needs.
“The current options available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme economic difficulties,” said Barnett in the letter. “However, if the economic difficulties are lessened by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy.”
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 because of 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 intolerantly low-level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.
The PRC will review the prices before they become effective Jan. 26, 2014, and must agree the prices are consistent with applicable law. The new price proposals are scheduled to be filed Sept. 26 and will be available on the PRC website at www.prc.gov and also will be available at http://pe.usps.com.
The full text of the Board chairman’s letter sent to postal customers about the pricing decision will be available at the following link:
The Postal Service receives no tax dollars for operating expenses and relies on the sale of postage, products and services to fund its operations.