The proposal – which would have seen the cost of a letter rise to 46 cents from January 2011 – was discarded by the regulator in Washington today.

Under the proposal, the price of mailing a letter would have increased 5.6%, far greater than the 0.6% level of inflation.

In a bid to revive the fortunes of the financially-stricken company, USPS bosses applied for the price rise in July, along with a potential rise in the cost of periodicals, post cards and parcels.

Despite huge cost-cutting measures being put in place, the business lost a total of $3.8bn last year as a result of dwindling mail volumes prompted by recession.

Ruth Goldway, PRC chairman, confirmed: “There will be no rate increases as a result of our decision for any class of mail.”

The move was applauded by the US Direct Marketing Association (DMA), who led efforts on behalf of its members encouraging the PRC to reject the request for “an unlawful and exorbitant rate increase”.

Lawrence Kimmel, DMA’s CEO, said: “Today’s decision is a great victory for businesses and consumers. The US Mail will remain a viable and affordable communications channel.

“The knowledge that postage rates will not rise faster than inflation is also an important element for the business community already operating in an extremely challenging business environment.

“This, however, is only a first step.  USPS customers must continue to work together, and with Congress, to help the Postal Service maintain competitiveness in the marketplace.

“DMA will work closely with Congress to correct the over-funding of postal pensions so that companies are not taxed to subsidise other government programs,” concluded Kimmel.  “We are fighting for reforms that will ensure a viable postal system able to meet the needs of consumers and the business community for generations to come.”

Another industry body campaigning against the price hike was Affordable Mail Alliance. Tony Conway, Affordable Mail Alliance spokesperson and executive director of the Alliance of Nonprofit Mailers, said: “The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs. The Commissioners recognised that imposing an additional tax on Postal Service customers is not the way to address its financial troubles.

“Our members look forward to working with the Postal Service on the long-term restructuring needed to restore the Postal Service to competitiveness.”

Source: Post&Parcel

Tags: Affordable Mail Alliance, Goldway, US DMA, US PRC, USA, USPS