The U.S. Postal Service announced a plan to increase the price of stamps from 46 cents to 49 cents on Wednesday.
The proposed changes come as the USPS deals with a precarious financial situation and are set to go into effect in January 2014. The increase is expected to generate $2 billion in incremental annual revenue for the company.
"Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges,” Board of Governors Chairman Mickey Barnett wrote in a letter that was disseminated to customers.
“However, if these financial challenges were alleviated by the timely enactment of laws that close a $20 billion budget gap, the Postal Service would reconsider its pricing strategy. We are encouraged by the recent introduction of comprehensive postal reform legislation in Congress, and despite an uncertain legislative process, we are hopeful that legislation can be enacted this year.”
Stamp prices have remained consistent with the average annual rate of inflation of 4.2 percent since the USPS was formed in 1971. Pricing for Standard Mail, Periodicals, Package Services and Extra Services also will be adjusted as part of a filing to the Postal Regulatory Commission (PRC) scheduled to take place Sept. 26.
USPS' price increase request in being filed above CPI-U due to "extraordinary and exceptional circumstances" which have contributed to continued financial losses.
The Postal Service recorded a $15.9 billion net loss last fiscal year and expects to record a loss of roughly $6 billion in the current fiscal year. In addition, the company has claimed that it has a significantly low level of available liquidity even after defaulting on its obligation to make prefunding payments for retiree health benefits.
The PRC will review the prices before they become effective Jan. 26, 2014, and must agree the prices are consistent with applicable law. The new price proposals will be available on the PRC website at www.prc.gov as well as at http://pe.usps.com.