The US domestic mail delivery market is by far the largest in the world, and a recent report found that its prices are very low compared to other developed countries. The U.S. Postal Service said this week that it wants to raise rates in July.
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The US domestic mail delivery market is by far the largest in the world, and a recent report found that its prices are very low compared to other developed countries. The U.S. Postal Service said this week that it wants to raise rates in July.
Justin Sullivan/Getty Images
The price of a Forever postage stamp is expected to increase in July, following a plan by the US Postal Service to increase the price of first-class stamps to 73 cents from the current 68 cents – a price that was just increased in January .
The 5 cent increase will take effect July 14. If approved by the Postal Regulatory Commission, this will be the sixth price increase since January 2021.
Despite this string of price increases, the U.S. Postal Service Office of Inspector General said U.S. postage stamps remain a bargain in the global market, citing much higher prices in Europe and other regions. (see more below).
The United States Postal Service has criticized in recent years because it used measures such as slow down mail to solve its financial problems. Last year, Government Audit Office noted the agency has made some improvements, but they added that the USPS “should continue to take steps to restore its financial viability and that Congress should consider additional changes to the USPS’s unsustainable business model.”
Are American stamps still a bargain?
According to a recent study, the price of first-class stamps in the US is cheaper than in many other developed countries. rating by the USPS Office of Inspector Generalor OIG.
The bureau compared the United States with 30 other countries selected based on national size and postal service revenue, as well as their ability to provide reliable data. The list includes much of the European Union, along with countries such as Canada, Japan, Brazil and Russia.
In terms of raw numbers, only four countries have cheaper stamps than the US. And while many postal services have increased prices in recent years, America’s increases have been only moderate compared to most countries in the sample.
“The price of one [USPS] stamps increased 26% from June 2018 to June 2023 ($0.50 to $0.63),” the inspector general’s report said, “less than half the average increase for our sample (55 percent) during that time.”
When the OIG adjusted its analysis for Purchasing power parity — currency conversion rates used to compare the relative affordability of goods in different countries — The United States has the lowest stamp prices among 31 postal services.
Why do stamp prices continuously increase?
You can’t imagine: Stamp prices Has increased more often and in larger quantities. And inflation is only part of the story.
“The post office increased prices [first-class mail] 18 times since January 2000,” according to the OIG report, “and has increased prices more frequently in recent years, increasing prices five times between January 2021 and January 2024.”
Use of first-class mail, the Postal Service’s main source of revenue, has long been in decline. In July 2007, the agency’s first-class mail volume – things like bill payments, letters and cards – reached 2.7 billion pieces. By June 2023, that volume had dropped 68%, to 900 million.
That doesn’t mean domestic first-class mail isn’t profitable. In fiscal 2022, its “insurance costs” amounted to 210%, according to the inspector general, “meaning its generated revenue was more than double its allocable costs.”
But the agency’s costs are rising. So while stamp costs were previously largely linked to inflation, the USPS now uses several criteria in its price increase formula, according to rules that were relaxed in November 2020. Pricing Equation now includes things like density: The Postal Service needs to deliver less mail — but to more addresses.
The rate increase also takes into account the agency’s obligation to pay retirees’ pensions and health benefits, a cost that is responsible for the new proposed rate increase more than inflation.
“This retirement rate authority is only in effect for five years,” a USPS spokesperson told NPR, adding that 2024 “is the fourth year the pension rate authority will be in use.”
So why are American stamps still cheaper than other places?
One obvious reason is scale. According to the OIG, the United States is “by far the largest market for domestic mail delivery,” with the Postal Service “handling half of the world’s domestic mail (50.2%) in 2021.”
While the USPS has seen a long-term decline in usage of its main domestic mail product, the decline has been even sharper and more prolonged in other countries. So even though the US agency is seeing a significant decline in numbers, it is still better than the Postal Service in many other countries.
And while inflation has put pressure on many economies around the world, some countries – and their postal customers – are feeling the situation worse than others. In the case of the USPS, “the price of stamps in the United States was 5 percentage points higher than the increasing cost of goods and services from June 2018 to June 2023,” the inspector general reported.
Among the other 30 countries in the sample, prices rose an average of 31 percentage points above inflation over that period, according to the report.
Even when the USPS received new authority to raise rates a few years ago, the size of those increases was still governed by price caps like those mentioned above. But different countries have different rules about postage price increases, which means some countries may increase prices more often or by larger amounts than the USPS.
