Magazine article Folio: the Magazine for Magazine Management

The Big Postal Hike May Be Dead, but Rates Could Jump 1.5% to 2% Next Year: Question Is Not If, but When

Magazine article Folio: the Magazine for Magazine Management

The Big Postal Hike May Be Dead, but Rates Could Jump 1.5% to 2% Next Year: Question Is Not If, but When

Article excerpt

LAST MONTH THE MAGAZINE INDUSTRY celebrated the Postal Regulatory Commission's unanimous decision to deny the United States Postal Service's push to break its existing CPI cap and raise rates for periodical mailers by 8 percent and First-Class mail stamps to 46 cents.

It was a huge win for periodicals mailers--many of whom would have been drive out of business by such a hike. But the fact remains that the industry is still likely to see a postal rate hike within the cap, as well as renewed efforts by the USPS to float the 8 percent rate hike again. On October 22, the Postal Service announced that it would appeal the PRC's exigency-rate ruling.

While it's unlikely the appeal will work, the Postal Service's real motivation here may be to put its fiscal woes front and center to force Congress to tackle issues such as reforming retirement benefit payments, according to anonymous blogger The Dead Tree Edition.

Timing of Increases Is Crucial

Regardless, mailers will face an increase next year. The question is whether the hike comes earlier in the year--in which case the increase will be relatively small--or later in the year, in which case the rate hike could be larger.

"Our economists tell us it could be m the neighborhood of 1.5 percent if the postal service were to move quickly and do it in the first few calendar months of 2011," says Jim Cregan, executive vice president for government affairs at MPA. "If they decide to wait until May, the cap could be a little higher. The economists seem to agree that range would be 1.5 percent to 1.8 percent with a maximum increase of 2 percent, with the way inflation is running."

And it's a jump that's been a long time coming. "Keep in mind that the USPS did not implement a CPI-based increase this year, so it has more than a year's worth of admittedly modest CPI increase in the bank," adds David Straus, American Business Media's Washington counsel and postal expert. …

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