Under a law allowing the USPS to increase postage rates as long as they do not exceed the nation's inflation rate as determined by the Consumer Price Index (CPI), most rates will increase on April 17, 2011 - one day before the 2011 federal tax deadline.
The average rate increase of 1.7%, spread over all affected postage rates will not exceed the current inflation rate, according to the Postal Service.
Earlier Postage Rate Increase Request Rejected
An earlier request by the USPS for a postage rate increase that included a 2 cent hike for First-Class postage and would have exceeded the inflation rate was rejected by the Postal Regulatory Commission (PRC) in October 2010.
Since the postage rate increase announced by the USPS on January 13 does not exceed the current inflation rate, it does not require PRC approval.
What Postage Rates Will Increase?
Effective April 17, 2011, the postage rate for single-piece, 1-ounce First-Class letters will remain at 44 cents. However, postage for each additional ounce will increase from 17 to 20 cents.
- The price for mailing a postcard will increase one cent to 29 cents.
- First-Class postage for letters mailed to Canada or Mexico will increase to 80 cents for either country. That's a 5 cent increase for letters to Canada and a one penny increase for letters to Mexico.
- First-Class postage for letters to all other foreign countries will remain at 98 cents.
- Rates for Express Mail and Priority Mail will not change.
How Much Will USPS Make from the Increases?
USPS projects the postage rate increase will generate $340 million for the balance of fiscal year 2011 and $720 million if implemented for a full 12-month period.
Will That Ease USPS' Financial Woes?
Not much, considering the USPS, despite eliminating over 105,000 full-time jobs, reported a net loss of $8.5 billion in 2010. The 2010 loss, which was $4.7 billion worse than the 2009 loss, included a $1 billion drop in revenue compared to 2009.
First-Class postage, basically unaffected by this most recent rate increase, continues to be the USPS' most profitable product, generating more than half of its total annual revenue. Unfortunately, First-Class mailing rates continue to decrease, falling by 4.8% in 2008 and 8.6% in 2009.