Stamps to Cost a Penny More in 2012

NEW YORK (MainStreet) -- Add stamps to the list of things getting more expensive next year.

The U.S. Postal Service announced Tuesday that it will increase the price of stamps to 45 cents early next year. The 1-cent increase is the first price change for first-class mail stamps in more than two and a half years.
The U.S. Postal Service will increase the price of stamps by a penny early next year in an attempt to alleviate its financial woes.

The U.S. Postal Service says the increase is an attempt to alleviate persistent revenue problems.

"The overall average price increase is small and is needed to help address our current financial crisis," Postmaster General Patrick Donahoe said in a written statement. "We continue to take actions within our control to increase revenue in other ways and to aggressively cut costs."

Stamps aren't the only postal product to be getting a bump in price. The cost of postcards will increase by 3 cents, to 39 cents. Letters to Canada or Mexico will increase by 5 cents, to cost 85 cents, and letters to other international destinations will be increased by 7 cents, to cost $1.05.

Prices also will change for other mail services like standard mail, periodicals, package services and extra services. Federal law prohibits the Post Office from raising prices beyond 2.1%, the rate of inflation calculated based on the Consumer Price Index.

All price increases will go into effect Jan. 22.

The decision to raise prices isn't surprising, given the Postal Service's escalating financial woes.

In September, officials at the Postal Service said that they may close more than 250 mail-processing facilities across the country and reduce service standards for first-class mail to cut costs.

The closings are an effort to stave off a default on a congressionally mandated $5.5 billion payment to prefund retiree health benefits.

"To return to sound financial footing we urgently need enactment of comprehensive, long-term legislation to provide the Postal Service with a more flexible business model," Donahoe said.

Check out our look at how the decline of the U.S. Post Office is likely to affect consumers.

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