U.S. Postal Service To Raise Stamp Prices By 1 Cent

WASHINGTON (Reuters) - The cash-strapped U.S. Postal Service announced on Tuesday a one-cent increase in the cost of mailing a letter, starting in January.

The new prices lift the cost of a first-class stamp to 45 cents starting on January 22, 2012, the first increase in more than two years.

The Postal Service is facing a financial crisis because mail volumes have declined as more people use electronic mail or the services of private sector competitors such as FedEx and United Parcel Service.

The Postal Service said the cost to mail a postcard will go up three cents to 32 cents, letters to Canada or Mexico will increase five cents to 85 cents, and letters to other international locations will increase seven cents to $1.05.

The agency, which is allowed to raise prices in line with the rate of inflation, said it filed the new prices with the Postal Regulatory Commission on Tuesday. The regulator has 45 days to approve the changes.


Until the price changes take effect, consumers can still purchase 44-cent Forever stamps, which do not require additional postage after prices go up.

"The overall average price increase is small and is needed to help address our current financial crisis," said Postmaster General Patrick Donahoe. "We continue to take actions within our control to increase revenue in other ways and to aggressively cut costs."

The Postal Service has asked Congress for permission to drastically overhaul its business, including cutting Saturday mail delivery and eliminating a massive annual payment to prefund retiree health benefits. The agency also is studying thousands of post offices and processing facilities for possible closure.

Source;  http://www.wtkr.com/news/sns-rt-us-usa-postaltre79h6z3-20111018,0,5507295.story

Rate Increase For Postal Service

WASHINGTON -- Battered by massive losses, the Postal Service wants to raise rates to bring in more money.

Postal officials scheduled a briefing today to discuss the amount of the increase, which will go to the independent Postal Regulatory Commission for review.

The boost comes as no surprise. Postmaster General John Potter said March 2 that a rate increase would be necessary for the agency, which does not receive tax funds for its operations.

The current 44-cent first-class rate took effect May 11, 2009.

While that change will be the most visible, rates for other types of mail will also go up, raising concern among business groups and nonprofit organizations.

Under the law, the post office is generally limited to increases no more than the rate of inflation -- 0.9 percent for the year ended in May.

However, the agency is allowed to seek a larger increase in unusual circumstances. Potter said in March he planned to take that step.

"The projections going forward are not bright," Potter said then. But, he added: "All is not lost. ... We can right this ship."

The agency lost $3.8 billion last fiscal year despite cutting 40,000 full-time positions and making other reductions. It has continued to face significant losses this year.

The weak economy has sharply reduced mail volume as companies cut their advertising. At the same time there has been a significant drop in lucrative first-class mail, with more and more people turning to the Internet to communicate with each other as well as to receive and pay bills.

The proposal drew a prompt complaint from the mailing industry.

"This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it," said Tony Conway, executive director of the Alliance of Nonprofit Mailers, a group representing charities and other organizations.

"Consumers everywhere will pay more for the letters and packages they need to send; businesses -- large and small -- will suffer and even more jobs will be lost," complained Conway, who was designated spokesman for the Affordable Mail Alliance, a coalition of businesses, charities and other mailers formed to oppose the increase.

Postal officials also have proposed eliminating Saturday mail delivery as a means of cutting costs, a change that would require congressional approval.

Post office finances are also complicated by the requirement that the agency make annual payments to pre-fund future health benefits for retirees, something not required of other government agencies.

And the postal inspector general contends that the Postal Service has been overcharged billions of dollars for retirement benefits for employees who worked for the old Post Office Department before it was converted to the Postal Service in 1970.

-- The Associated Press

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