On the start of business Monday the price of a first-class postage stamp will jump 6.5%
This means that if you do a lot of letter mailing, or sending of holiday and birthday cards, the savings you’ll receive by stocking up on forever stamps – before Monday – are an even better investment than usual this year.
On Monday, the U.S. Postal Service will increase the cost of a stamp to 49 cents from the current 46.
Forever stamps are always a good buy right before any price increase. That’s when they are at their most valuable. But over time rising overall prices eat away at the investment. In a year the one or two cents you save will usually have been gobbled up by inflation. The buying power of a cent drops as prices increase, and you’d often be better off having spent it on something else than parking it in an asset that isn’t appreciating more than the rate of inflation.
That’s especially true of Forever stamps. In 2006, the government passed the Postal Accountability and Enhancement Act, which states that the price of a stamp can’t increase faster than the rate of inflation.
Those of you paying attention may have already noticed something strange. The postal increase is 6.7%, even though inflation never topped 2% in 2013. Also, the postal agency plans to appeal the decision limiting the price hike to two years and will argue for the increase to be permanent, said agency spokeswoman Katina Fields.
To add to the confusion, the postal service is also planning to ask permission for another round of 1-cent price hikes to keep up with inflation in 2015 and 2016.
So, why the abnormal increase and planned requests?
Basically, the Postal Service is in dire straits. Because of mounting financial losses, the USPS asked for the authorization to increase prices more than the rate of inflation. Regulators approved the request last month, but declined to make it permanent. The 49 cent stamp is only guaranteed for two years – not that the public has a snowball’s chance in Hell of stamp prices being reduced after the two year limit.
Launched in 2007, Forever Stamps are always valid, no matter what people paid for them and even if prices go up in the future. They are also very popular: In 2012, 21.8 billion Forever Stamps were sold, making up 84% of stamp sales. That same year, the U.S. Postal Service delivered 68.7 billion pieces of first-class mail.
A year ago, the price of a first-class mail stamp went up by 1 cent in January.
On Sunday, the cost of mailing a post card will also go up to 34 cents, a 1-cent increase.
The price hike includes a one-cent increase to keep pace with inflation, which won’t change.
The current rate hike brings a much-needed cash influx to the financially struggling postal service.
The USPS said in November that it lost $5 billion in the latest fiscal year ending Sept. 30. That’s far less than recent years, but that’s on top of years of losses. The agency has exhausted a $15 billion loan from taxpayers to make up for shortfalls.
Much of its cash problems stem from a congressional mandate to make annual $5 billion payments for future retiree health care benefits.
FOR A 2014 USPS POSTAGE RATE INCREASE GUIDE CLICK HERE
Disclaimer: On January 4, 2016, the owner of WestEastonPA.com began serving on the West Easton Council following an election. Postings and all content found on this website are the opinions of Matthew A. Dees and may not necessarily represent the opinion of the governing body for The Borough of West Easton.
