The Postman Always Rings Twice

For the past couple of years the United States Postal Service (USPS) has issued a rate increase each May.  The amount of the increase is tied to the Consumer Price Index (CPI) of the year.  The result is smaller postage rate increases on an annual basis.  Prior to this procedure, rates were increased in much larger increments, but on a less frequent bases.

What is intriguing is that year-to-date for 2009, the CPI is slightly negative.  If it ends the year that way, it will be interesting to see what the USPS will do next May.  One thing is certain; they will not lower their rates.  It could be possible that there would be no rate increase come May 2010.  However, that is unlikely given that the USPS is operating at a loss expected to be in the billions.

The same provision that mandates annual rate increases tied to the CPI, also allows for a rate increase surpassing the CPI in the event of extreme or unusual situations.  I expect that amid raising costs, decreased mail volume, and a negative CPI, the USPS will exercise this clause and seek a rate increase this May anyway.

(The title of this blog is borrowed from a 1946 movie, and its 1981 remake, of the same name.  As I recall, the movie had nothing to do mail and everything to do with deceit and intrigue.)

What do you think? Please leave a comment!