Peel ’n’ weep: Stamps go up 2 cents Monday

updated 10:18 a.m. ET May 11, 2009

WASHINGTON - Peel it and weep: It'll cost an extra 2 cents to mail a letter starting Monday.

The price of a first-class stamp will climb to 44 cents, though people who planned ahead and stocked up on Forever stamps will still be paying the lower rate.

It's the third year in a row that rates have gone up in May under a new system that allows annual increases as long as they don't exceed the rate of inflation for the year before.

While the increase will bring in added income, the post office continues to struggle financially as more and more lucrative first-class mail is diverted to the Internet, and the recession discourages businesses from sending their usual volume of advertising.

The Postal Service, which does not get a taxpayer subsidy for its operations, lost $2.8 billion last year and is $2.3 billion in the hole just halfway through this year.

Postmaster General John Potter has asked Congress for permission to reduce mail delivery to five days-a-week. The agency is offering early retirement to workers, consolidating excess capacity in mail processing and transportation networks, realigning carrier routes, halting construction of new facilities, freezing officer and executive salaries at 2008 pay levels, and reducing travel budgets.

Even so, the rate increase is unlikely to cover the losses and the possibility remains that the post office could run out of money before the end of the budget year, Sept. 30.

The post office could have cited extraordinary circumstances and asked the independent Postal Regulatory Commission for larger increases, but officials worried that would only result in a greater decline in mail volume and greater losses.

Potter has sought congressional changes in how the post office prepays for retiree health care, to cut its annual costs by $2 billion.

While the new 44-cent rate covers the first ounce of first-class mail, the price for each additional ounce will remain unchanged at 17-cents.

Postal officials estimate the increase will cost the average household $3 a year.

Other changes taking effect Monday:

• The postcard stamp increases by a penny to 28 cents.
• The first ounce of a large envelope increases 5 cents to 88 cents.
• The first ounce of a parcel increases 5 cents to $1.22.
• New international postcard and letter prices are, for one ounce, 75 cents to Canada; 79 cents to Mexico; and 98 cents elsewhere.

Most Postal Service shipping services prices were adjusted in January and will not change in May.

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