Postage Rate Change

In January, 2012 the price of sending a letter first class in the United States will rise from 44c to 45c. The increase of only a penny matches the smallest postage rate rise ever and on a percentage basis (a bit more than 2%) is the smallest percentage increase ever by a wide margin. Many have speculated why a business with losses as significant as the USPS would increase rates at such a low level. The standard reasons include navigating the politics and regulations of the Postal Rate Commission and the fact that letters are competing with free forms of communication in the virtual world so postage rates need to be kept low or users will migrate to other platforms. But there is another strong reason for the small rate rise and one that foretells increasingly frequent one and two penny rises. “Forever” stamps are now the mainstay of United States postal emissions. These stamps allow users the right to first class postage at any time in the future with their purchase today. If the Postal Service were to wait several years and announce a large 3c or 4c increase (as they often done have in the past) postal patrons would run out and stock up on “forever” stamps before the rate rise and lock in lower postage rates preventing the postal service from gaining some of what it sought with the postage rise in the first place. This has been the rate increase policy of Canada, Great Britain and Sweden, all of which have had “forever” stamps for years and which have instituted a series of frequent small price increases.