The U.S. Postal Service has proposed raising postage rates this spring to adjust for inflation, according to a recent filing from the organization.
Under the USPS plan, which was submitted to the Postal Regulatory Commission last Thursday, prices across all classes of mail would increase by an average of 1.966 percent on April 26. The cost of a single-piece stamp would remain at 49 cents, but the rate for letters weighing more than 1 ounce would increase from 21 cents to 22 cents per additional ounce.
Additionally, the agency would raise the price of delivering letters internationally from $1.15 to $1.20 and bump the rate for postcards from 34 cents to 35 cents. None of the increases would affect shipping products or single-piece stamps.
The Postal Service has estimated that its plan would bring in an estimated $900 million per year for the agency. Since the plan would not take effect until April, it would only increase revenue by $400 million for 2015.
The USPS lost $5.5 billion in 2014, in large part because of continued struggles maintaining first-class mail volume and a congressional requirement to prepay more than $5 billion annually toward retiree health benefits.
The Postal Regulatory Commission has until March 1 to rule on whether the rate hikes are legal under the federal price cap that limits them to the rate of inflation.
In a statement last week, the USPS said its proposal represents the “latest in a series of steps the Postal Service has taken as part of a comprehensive approach to achieve financial stability.”
“By growing volume, revenue and contribution, the Postal Service will continue to meet America’s mailing and shipping needs well into the future,” the agency said.
But trade associations that represent frequent mailers have criticized the proposals, they would harm many of the businesses that depend most on USPS services.
“As postage goes up, the number of people a cataloger can reach goes down,” said Hamilton Davison, president of the American Catalog Mailers Association. “Postage is the greatest single cost component for catalogers. It’s a huge impact.”
Peggy Hudson, senior vice president of government affairs for the Direct Marketing Association, said the plan represents “yet another attempt by the U.S. Postal Service to squeeze the direct-mail industry.” She has encouraged the commission to deny the USPS request.
The commission last year approved an emergency rate increase to help the Postal Service recoup millions of dollars it lost during the economic downturn. The temporary price hike, which was the largest in 11 years, is set to expire in January 2016.
In its fourth-quarter financial report, the Postal Service credited the 2014 rate increase — along with its growing package business — for helping the agency increase its operating revenue by $569 million compared to 2013.