USPS new system will peg postal rate increases to inflation

The U.S. Postal Service today announced that postage costs for nonprofit and other mailers will be set using a new approach pegged to inflation.

The new system enables the Postal Service to increase postage rates
annually — more frequently than it has in the past — but requires the increases to be no higher than the rate of inflation. To determine inflation, postal officials said they will rely on the most recent monthly average compiled by the Bureau of Labor Statistics.

Organizations that represent charities welcomed the news.

“I am very pleased, this is a huge deal,” said Anthony Conway, executive director of the Alliance of Nonprofit Mailers. “No. 1, it protects postal customers. Going into the future, they get comfort from knowing that it can be no higher than inflation.”
The Postal Service, he added, “used to do whatever they wanted” in setting new rates.

Previously, new rates were the result of a cumbersome process in which an independent body spent months in hearings, deliberating over research and comments submitted by charities and other organizations that send a large volume of mail. That process will no longer take place.

With the new system, nonprofit organizations are likely to see significantly lower postage increases than in the past, albeit more frequent ones. For example, postal officials noted that a recent monthly inflation average was 2.3 percent, much lower than the 6.7 average increase in postage for standard mail, the class of mail used by charities most frequently, that took place last spring.

While the law authorizing the new rate-making system requires the Postal Service to give a 45-day notice before postage costs go up, postal experts said that a longer notice is more likely, because the service and mailers need more time to adjust their mail-processing and printing schedules. Mr. Conway speculated that a 90-day notice is likely.

Based on attending meetings in which the Postal Service solicited mailers’ views on the best time of year for rate changes, he said that the Postal Service is likely to announce new rates in February that would take effect in May.