Canada Post: No basic domestic letter rate increase in 2008
Canada Post Corporation announced that there will be no increase in the domestic basic letter rate in 2008.
Under the price-cap formula approved by the federal government in 2000, basic letter rate increases, when warranted, will not exceed 66.67 per cent of inflation as measured by the Consumer Price Index from May prior to the last increase to May of the current year. Increases will be implemented no more than once a year, in January, and announced no later than July 1 in the year before the increase goes into effect in the Canada Gazette Part I.
The Consumer Price Index from May 2006 to May 2007 shows an increase of 2.2 per cent negating an increase in the domestic letter rate next year. Price changes for the remaining regulated domestic Lettermail and USA and International letter-post products continue to be market-based and proposed increases are scheduled for implementation on January 14, 2008.
Canada Post announced in the Canada Gazette Part 1 the following proposed rate adjustments.
– $0.03 increase to $0.96 for letters, cards and postcards up to 30g destined for the USA;
– $0.05 increase to $1.60 for letters, cards and postcards up to 30g to foreign destinations.
Canada Post’s proposed rates for a 30-gram letter to the USA and other International destinations compare favorably to the rates other countries charge to send a similar piece of mail to Canada. It costs $2.64 from Great Britain, $3.05 from Germany and $1.80 from Australia to send a 30-gram letter to Canada. The cost to mail a 30-gram letter from the USA to Canada is $1.15.
Annual price increases are consistent with industry practice and are necessary for Canada Post to retain a competitive position in an ever-changing marketplace. Rate adjustments are necessary to keep pace with inflation, direct operating costs and the need to reinvest in network infrastructure to meet customer demands. Fuel costs, for example, rose 6 per cent in 2006 and are expected to remain high.
Canada Post is facing inflationary pressure from a number of sources. One such source is terminal dues, a pricing mechanism that allows the postal administration receiving mail for delivery to collect for the cost of delivery from the postal administration sending the mail (in this case Canada Post). It is expected that terminal dues to the United States will increase by a minimum of 5 per cent in 2007, while dues to other international destinations will increase by 2.5 per cent.
