The U.S. Postal Service proposed raising the price of first-class stamps by 2 cents, to 46 cents, and rates for periodicals by 8 percent and catalogs by 5.1 percent to narrow a deficit projected at $7 billion this year.
The price increases would raise $2.3 billion in the first nine months of 2011, the service said in a statement today in Washington. Increases, which must be reviewed by Postal Regulatory Commission, would take effect Jan. 2. “We’re doing this because the Postal Service really faces a serious risk of financial insolvency,” said Stephen Kearney, a senior vice president with the Postal Service.
The commission has 90 days to rule on the proposal, one of several steps the Postal Service is considering to cope with a decline in mail volume as Internet use increases. The service also is seeking approval from Congress to drop Saturday delivery, which has been provided since the Post Office was founded in 1863.
The Postal Service is using a legal provision that lets it propose rate increases greater than the rate of inflation under “exceptional or extraordinary” circumstances, Kearney said. The average proposed rate increase is 5.6 percent, compared with inflation of 0.6 percent, he said.
Mailers of catalogs, magazines and newspapers are prepared to fight the rate increase, James Cregan, executive vice president of government affairs for the Magazine Publishers of America, said in an interview before the announcement. The group’s members include Time Warner Inc. and Meredith Corp.