Thursday, January 8, 2009

2009 Postal Hike: Less than 4%?

Crystal Ball Gazing:
2009 Postal Hike: Less than 4%?

Just two years ago the Post Office’s ruling Board initiated a once-a-year postal increase policy. A result of loud public angst over three hefty increases in 18 months, the policy was tied to the CPI (Consumer Price Index). Postal rate increases could mirror—but not exceed—the CPI increase.

That was then and this is now.

Until recently, postal financial pundits were predicting a 2009 rate increase of 5%. But suddenly we are in a deflationary period. Consumer prices are dropping, not rising. As the CPI drops, so does the USPS postal increase.

In October, the CPI decreased by 1%; in November, it accelerated to 1.9%. If December’s CPI follows November’s lead, it would result in a postage rate cap of 3.75%. If December remains unchanged, the rate cap would be 3.9%, just squeaking in below 4%.

The new rates will be announced in February and implemented in May. Stay tuned.

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