Key insights
- The USPS is seeking to raise stamp prices and implement temporary surcharges to combat financial losses. While this directly impacts consumer costs, the overall effect on US equities is limited. The price hikes could marginally dampen consumer spending, but the deal with Amazon provides some offset. The situation highlights broader inflationary pressures.
By David Shepardson
WASHINGTON, April 9 (Reuters) - The cash-strapped U.S. Postal Service said on Thursday it wants to raise the price of first-class mail stamps to 82 cents from 78 cents effective July 12.
The proposal, which must be approved by the Postal Regulatory Commission, would raise overall mailing services prices by 4.8%. USPS has warned it could run out of cash as soon as February.
Earlier this week, USPS won approval from the Postal Regulatory Commission for a temporary 8% price hike for priority mail and package deliveries, effective April 26, to deal with rising transportation and fuel costs. USPS plans for the surcharge to be in effect through January 17.
The service has reported net losses of $118 billion since 2007 as first-class mail, its most profitable product, has fallen to its lowest volume since the late 1960s. USPS in February reported a quarterly loss of $1.25 billion.
The commission separately approved USPS's plan to suspend employer pension contributions starting Friday, which will conserve $200 million in cash every two weeks, or $2.5 billion through September 30.
Reuters also reported USPS struck a deal with Amazon that will see the retailer use the Postal Service for at least 1 billion packages a year, or 80% of its volume last year.
In March, U.S. Postmaster General David Steiner said the Postal Service was hiring restructuring advisers to help address its mounting financial troubles.
Steiner wants to be able to raise prices over the current 78 cents for first-class mail and thinks Americans would be willing to pay 90 or 95 cents per letter, when much of the world pays $2 or more.
(Reporting by David Shepardson; Editing by Aurora Ellis)