Why the Postal Service has been losing money for years

New York (CNN Business)For the third year in a row, the United States Postal Service is hiking the prices of its delivery services — but just for a few months.

The postal service is requesting a temporary price increase on a variety of mail services for the peak holiday season to offset rising delivery costs. The USPS said in a statement the temporary rate adjustments are “similar to ones in past years that help cover extra handling costs to ensure a successful peak season.”
The price increases, which will range from 25 cents to upwards of $6 per package, would go into effect on October 2, 2022 and last through January 22, 2023 for individuals and businesses on mailings that include Priority Mail, Priority Mail Express and First-Class Package Service.

“These temporary rates will keep USPS competitive while providing the agency with the revenue to cover extra costs in anticipation of peak-season volume,” it said. The Postal Regulatory Commission still has to approve the higher rates.

The USPS enacted similar temporary price increases In 2020 and 2021 because of heightened demand and extra shipping costs.

Last month, the cost of a US postage stamp increased by 2 cents, raising the cost of mailing a first-class letter by 3.4%, to 60 cents. A price hike that modest seems almost quaint given that overall consumer prices are up 9.1% year over year, the fastest pace in 40 years.

Parcels and packages are where the Postal Service is really making its money today. The USPS handles final delivery of many packages shipped by Amazon (AMZN) and other online retailers, with items delivered in bulk to the post office nearest to the buyer’s home.

— CNN Business’ Chris Isidore contributed to this report.
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