Postal Increases Under Rate of Inflation

WASHINGTON, DC—The latest U.S. Postal Service (USPS) rate increase is confronting mailers, and this time there are no unpleasant surprises.

For the post office, however, the news was not so comforting.

As promised by the postal reform legislation passed in late 2006, the first increase under the new rules did not exceed the Consumer Price Index (CPI) rate of inflation. The increases fall in the 2.9 percent range and will take effect May 12.

The USPS has been struggling. It reported that mail volume was down 3 percent in the first quarter of fiscal 2008. First Class volume was down 3.9 percent, while Standard Mail decreased 2.6 percent.

H. Glen Walker, USPS executive vice president and CFO, attributed declining volume to “disturbing trends” in the overall U.S. economy. Postmaster General John Potter noted that while revenue was higher year-over-year, it is $500 million less than expected given last May’s price increase.