Stamp Prices Increase as Postal Commission Approves USPS Cost Hikes

Stamps are about to get more expensive as a price hike proposed several months ago by the U.S. Postal ServiceUSPS) and recently approved by the Postal Regulatory Commission (PRC) kicks in on Sunday, Jan. 22.

The cost-of-living crunch that’s frustrating American households also put a squeeze on USPS, which in October 2022 The company stated it had plans to increase prices. “offset the rise in inflation.”

The agency stated in Oct. 7 statement It proposed a range o price increases including raising stamps, mail insurance fees, money orders, and PO. box rentals.

The PRC approved the new rates at the end November 2022.pdfIncluded in the price increases are an approximate 4.2 percent for First-Class Mail and USPS Marketing Mail, Package Services and Special Services.

The price of Periodicals is increasing by 3.5%

“Nearly all of the rate authority available to the Postal Service in this proceeding (i.e., 4.200 percent for each class) is a result of the increase in inflation,” PRC stated in its order for price adjustments.

Inflationary Pressures

Although U.S. inflation has been somewhat lower in recent months, the most recent Consumer Price Index (CPI), data shows that December 2022 prices rose by 6.5% year-over–year and fell by 0.1 percent month-over–month.

An alternative measure of inflation that uses the same methodology that the U.S. government used to measure CPI in the 1980s puts December’s inflation figure at a significantly higher 14.5 percent.

The government’s CPI inflation reading of 6.5 percent is the slowest annual rate in over a year and this number has been trending downward in recent months.

According to the PRC’s price adjustment order, the cost of mailing a 1-ounce letter will go up from 60 cents to 63 cents, while domestic postcards will go up from 44 cents to 48 cents.

Special Services: Money Order prices will rise 6.7% and Post Office Box Service prices will increase 4.5 percent. The only Special Services product that isn’t seeing a price boost is Credit Card Authentication.

Attached to the PRC price adjustment or is a comprehensive list of all price changes (pdf).

The USPS is Hit by Inflation

The USPS Office of Inspector General – OIG has reported The Postal Service has seen an inflationary impact that is disproportionate to its investments, pay increases tied with collective bargaining agreements and limitations on rate rises. There have also been restrictions on investments.

Two-thirds of the USPS’s $82 billion in annual expenses go towards labor costs, with nearly three-quarters of its workforce receiving cost-of-living adjustments twice a year.

Postal Service businesses are also affected by restrictions on liquid assets investments, fuel costs, union agreements, and other factors.

These cost-of-living adjustments are part of the USPS’s collective bargaining agreements and are separate from annual pay bumps that Postal employees get.

According to OIG reports, the OIG report shows that July 2021’s adjustment for eligible employees was $1,935. This is approximately ten times more than what they received in July 2020.

Union agreements are less restrictive for businesses than they are for the Postal Service, which would result in lower costs.

The OIG report notes that USPS doesn’t hedge fuel prices by buying fuel for the future at a predetermined earlier price, which is a way businesses can mitigate the impact of price volatility.