In an unexpected announcement late Friday, September 20, the Postal Service announced that it will not be increasing prices for market-dominant products next January as had been forecast. In its press release and concurrent Industry Alert, the agency stated:
“A recommendation by Postmaster General Louis DeJoy not to raise prices in January 2025 for Market Dominant products, which includes First-Class Mail, was accepted by the Governors of the United States Postal Service. Accordingly, the price of a stamp to mail a 1-once single-piece First-Class letter will not increase.
“The Postal Service’s operational strategies are designed to boost service reliability, cost efficiency, and overall productivity.
“ ‘Our strategies are working, and projected inflation is declining,” said Postmaster General DeJoy. ‘Therefore, we will wait until at least July before proposing any increases for market dominant services.’
“The Postal Service remains committed to continued cost saving measures and to keeping its products and services affordable. Only a handful of countries have a lower price for a domestic single-piece letter.
“Lastly, the Postal Service continues to deliver on the tenets of the Delivering for America 10-year plan, while executing our public service mission – to provide a nationwide, integrated network for the delivery of mail and packages at least six days a week – in a cost-effective and financially sustainable manner over the long term, just as the US Congress intended and the law requires.”
Reading the tea leaves
Though the official statement contained plenty of the usual spin, it offered no insight into why, just three weeks before it would have filed its proposed rate hike with the Postal Regulatory Commission, there was a pause in DeJoy’s previously-announced schedule of semi-annual price increases.
Officially, only the Governors of the Postal Service can approve filing for higher prices for market-dominant products, though that is widely believed to be simply the formal approval for what postal executives bring them. In this situation, however, and given some governors’ expressions of caution after last August’s board meeting, it’s not beyond possibility that DeJoy’s “recommendation” was the public result of closed-door urgings by the governors. Not being a person to easily accept redirection, it’s unlikely that DeJoy changed course on his own initiative.
The governors know the financial and volume data, they know Congressional sentiment, and they’re aware of negative publicity over poor service, issues involving DeJoy’s changes to the processing and delivery networks, and the agency’s readiness for the upcoming election season.
No matter how much the USPS tries to manage the information reaching the governors, they’re not sequestered. In turn, breaking their usual accession to DeJoy’s wishes, they might have concluded that a pause was needed, if for no other reason that to generate some positive publicity.
Save the champagne
Regardless, though not having to face a price increase in January is welcome, it needs to be offset by some other facts that are far from good news.
First, the size of the January increase would have been relative small – only 1.532% – and CPI-only, based on the six-month interval since the preceding increase.
Second, as of the most recent data released by the Bureau of Labor Statistics, the annualized CPI was 3.179%; that figure will change over the next six months when the USPS files in April 2025 for a July increase.
Finally – and worst of all – the “adders” will be available for the July increase. Though the 2% “non-compensatory” supplement only applies to Periodicals, all will endure the “density” and “retirement” adders that, last July, together added another 6.132%. Their 2025 value won’t be known until early next year but, regardless, the total of CPI and the “adders” might be a sizable figure – far from good news.
Ratepayers can only wait to learn what the Postal Service will have in store for them in April.
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