Sheridan Magazine Services: News Releases

USPS Projects Smaller Rate Increase in 2010

May 2009 — Discussed for months, the 2009 USPS rate increase took effect this week ... so it's time to change the subject, right?

Not so fast.

Dan Blair, chair of the Postal Regulatory Commission, was already talking about the projected 2010 increase when he addressed the House Oversight and Government Reform Federal Workforce, Postal Service and the District of Columbia Subcommittee in late March.

The good news is that Blair — noting the current downward trend of inflation — suggested that next year's increase may be less than 1%. Postal rate increases are capped to the Consumer Price Index (CPI) by the Postal Accountability and Enhancement Act of 2006 (PAEA).

The CPI has been steadily decreasing over the past few months, and Blair said that if the trend continues, it could result in the smallest rate adjustment in years. Unfortunately for mailers, there's no requirement that the Postal Service reduce rates if the CPI ends the year in negative territory.

All that being said, however, Sheridan Magazine Services' Postal Coordinator Lloyd Mills cautions that it's always smart to be conservative in your planning. "As we've seen over the past 12 months, inflation can take a turn for the worse very quickly," he notes. "To be on the safe side, I'd continue to budget for a 3% increase in 2010."

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Despite a more optimistic outlook for 2010, there's concern in some quarters about the possibility of another, sharper increase later this year due to “extraordinary and exceptional circumstances” — a so-called exigent increase that allows the USPS to drive increases above the CPI price cap.

But legislation now in Congress would provide the USPS significant relief from its pension-related obligations, thus making an increase much less likely. USPS Postmaster General John E. Potter says that H.R. 22, which is fully supported by the Magazine Publishers of America and others across the industry, could save the USPS $2 billion annually over an eight-year period, improving its short-term cashflow and helping to avoid the need for an exigent increase or other drastic measures.

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