More USPS Price Increases Will Come Sooner than Shippers Think

Bad news for bargain shippers: USPS has pledged to raise prices yet again in order to outpace rising costs. The culprit behind upcoming USPS price increases? In a word, inflation.

Inflation Keeps Driving Up the Postal Service’s Costs, Which USPS Needs to Offset with More Price Increases

Inflation is at a 40 plus-year high, hitting 8.5% in March. This has caused prices for everything to soar, from groceries to gas—which USPS relies on to fuel its delivery trucks. In order to cool the economy, the Federal Reserve has raised rates at breakneck speed; this past week, the Fed announced a rate increase of 0.50 percent, following a 0.25 percent increase in March.

To outpace inflation, Postmaster General Louis DeJoy has stated that USPS has no choice but to raise prices. In fact, last month (April 2022), USPS announced it would raise rates for market-dominant First-Class Mail by 6.5%. For package services, the Postal Service plans to raise rates for USPS Media Mail service by 8.5% beginning July 10. However, according to DeJoy, these aren’t the only price increases that USPS shippers should expect this year.

In Postmaster General DeJoy’s Words

When speaking on the possibility of more price increases for USPS, Postmaster General DeJoy said the following:

“From my perspective, the mailing industry needs to be prepared for continued use of our authority to raise prices on market dominant products at an uncomfortable rate until such time as we have accomplished our objective of projecting a trajectory that shows us becoming self-sustaining—as required by law. While our pricing decisions are ultimately made under the authority of the Board of Governors, in the near term, I will most likely be advocating for these increases.”

Recently-Passed Postal Service Reform Act is Not Enough to Bring USPS Out of the Red

In the period between January 1 and March 31 (Quarter 1), USPS still saw a net loss of $639 million. The Postal Service Reform Act didn’t become law until after the second quarter of fiscal year 2022, which means the relief it will provide by eliminating the Congressional mandate that required USPS to pre-fund health care costs for future retirees wasn’t reflected in the Postal Service’s financial results.

Still, as mentioned in the quote above, the newly-ratified legislation isn’t enough to pull the Postal Service fully out of its financial trouble. Instead, DeJoy asserts USPS must keep raising prices to outpace rising costs…and that shippers should expect more increases sooner rather than later.