Postal rate hike less certain

It looks like there is one price hike that consumers may yet get to avoid next year. The U.S. Postal Service's plans to raise prices on stamps to 46 cents from 44 cents in January -- a 4.5% increase -- could be in doubt.

In an unprecedented move today, a coalition of 700 mailers acting as the Affordable Mail Alliance followed through on its threat to join together to oppose the rate hike, filing a petition with the Postal Rate Commission and joining some Capitol Hill critics of the rate hike. The commission needs to approve the rate hike for it to take effect Jan. 2.

The move is unusual because normally the 700 mailers each try to win the best rate for themselves and in the process, sometimes counter each other's rate arguments.

This time mailers are acting together because they are enraged at the Postal Service's attempt to raise rates an average of 5.6%, which they describe as an increase10 times the rate of inflation. Under legislation enacted in 2006, the Postal Service is limited to seeking a cost of living increase, except in "exceptional or extraordinary circumstances."

Mailers argue that with the cost of living up 0.6%, postal rates should be rising just 0.6%.

"They are trying to break the consumer price index cap by 10 times," said Jerry Cerasale, a member of the coalition and executive VP of the Direct Marketing Association. "We believe that if we are united, it makes our case stronger. It's difficult for the Postal Service or the Postal Rate Commission to play one off against each other."

The mailers also say the Postal Service hasn't adequately cut costs.

JoAnne M. Veto, a Postal Service spokeswoman, said the drop in mail volume from the economy and e-commerce justify the rate hike.

She said mail volume has dropped 25.6 billion pieces, or 12.7%, in one fiscal year, declining at a faster rate than immediately following the 9/11 terror attacks.

"The country continues to work through the worst recession since the 1930s. Key business customers have been devastated and have withdrawn from using the mail: credit card companies, financial institutions, real estate companies, retailers," she said.

She also said the Postal Service is "confident" it has met the test for a rate hike higher than the inflation rate.
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