Get Ready Now for the Postage Increase in May

The United States Postal Service (USPS) has another rate increase looming in the near future.

On May 11, 2009, the price to mail a first class letter will increase 2 cents, from the current 42 cents to 44 cents.  This increase is just shy of 5%.

Although such a high increase seems untenable given the current economic conditions, the reality is that the USPS lost several billion dollars last year due to a decrease in mail volume.  Unfortunately, their operation is not easily scalable so when volume drops, their costs do not decrease proportionally.  (Instead of rate increases to stave off the losses, I favor steps to increase mail volume — a rate decrease should accomplish that.)

Most other postage services will see increases on May 11 as well.  However, the cost for additional ounces on first class mail will remain unchanged at 17 cents.

To avoid needing to buy a bunch of 2 cent stamps to match with your soon to be out-of-date 42 cent stamps, buy the “forever” stamps instead.  Although they only cost 42 cents now, they can be used to mail a first class letter “forever” — regardless of future rates.  (At current interest rates, buying forever stamps is a much better hedge against inflation!)

By the way, the USPS is now on a schedule for annual rate increases, slated each May.

What do you think? Please leave a comment!