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Time to raise postage stamp prices?
U.S. Postal Service says a price increase will not occur -- at least not until 2006.
November 24, 2004: 1:45 PM EST

NEW YORK (CNN/Money) - The U.S. Postal Service said Wednesday it will not raise its postage rates -- at least not until 2006.

"Prices will stay the same next year," Gerry McKiernan, spokesman for USPS, told CNN/Money. "And that's a guarantee."

The Wall Street Journal reported earlier that the USPS is expected to ask for a rise in postage stamp prices early next year of at least 10 percent -- possibly increasing the price of a first-class stamp to at least 41 cents from 37 cents.

The possible rate increase stems partly from the failure of proposed legislation that would have allowed the post office to take advantage of pension-fund savings, the paper said.

McKiernan said the company has not ruled out a possible price increase, but the process to request such an increase and have it approved can take as many as 18 months. The government-sponsored postal services company has not yet started the process, he added.

The last price increase occurred in June, 2002 when the first-class postage rate jumped to 37 cents from 34 cents. Prior to that, the rate had stayed unchanged since its 1-cent increase in 1999.

The USPS has also faced a decline in market share as more and more customers prefer e-mail and online bill payments instead of using traditional mail services, said McKiernan.

"First-class mail showed a 1 percent decrease over the past 12 months," he said.

Oil prices, up sharply from a year ago, but down from the highs hit in October, may play a key role in its decision to apply for a rate increase, said McKiernan.

"We have more trucks on the road than anybody. High fuel and gasoline prices can easily influence our bottom line," he said.

Transport competitors, such as FedEx Corp. (Research) and United Parcel Services Inc. (Research), have also increased their prices in recent years.

"Fuel prices go up, and they have to try to offset that with something," said David Campbell, analyst at Thompson, Davis & Co. "It's not a business where costs stay the same every year."

FedEx and UPS will raise their rates at a roughly 3 percent next year, said Campbell. "They have raised about 5 percent so far this year because of high fuel prices."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.