No Postal Rate Increase For Now

On September 30, the Postal Regulatory Commission (PRC) denied the Postal Service's request for an "exigent" (emergency) rate increase averaging 5.6%. The vote by the PRC was a unanimous 5 - 0 in opposition to the increase. This is good news for mailers.  Periodicals would have been especially hard hit with the proposed 8% increase. First class postage would have gone from $0.44 to $0.46 or 4.5%.

The rate increases would have severely impacted businesses that rely on direct mail and catalog distribution as well as magazine publishers and printers. It is generally believed that a rate increase at this time would result in a further erosion of mail volume, driving the USPS even deeper into the red. There is already significant pressure on marketeers to shift communications to electronic media. Most in the industry are well aware of the superior performance of direct mail over e-mail advertising. But a big jump in cost for mail would likely push some into cutting volume or switching to the less effective, but cheaper, electronic media.  

On that same day, Congress chose not to allow a delay in a required payment of $5.4 billion to the USPS retiree medical account which it had allowed last year. This action, along with the rate denial, keeps pressure on the USPS to find more ways to cut costs or find new sources of revenue.