CPI Released by Bureau of Labor – 2018 USPS Rates

09/14/2017

The Bureau of Labor Statistics released the CPI data for August. Using the Postal Regulatory Commission’s formula for calculating the Postal Service’s pricing authority on an annual basis (i.e., the CPI cap on prices), the applicable cap is 1.987%. The Postal Service has stated it plans to file for a January 2018 rate increase, based on the August CPI and the resulting cap. The cap is applied at the class level such as Periodical and USPS Marketing Mail. Traditionally the price changes for some categories and rate cells will be greater or lesser than the cap. For example, they can apply the increase at a cell level to try to bring alignment to products that are underwater or to optimize the increase from a revenue perspective.

The USPS also has unused rate authority from previous pricing actions, and these could be included in the final figure.

In August, USPS VP of Pricing and Costing, Sharon Owens, shared pricing signals at the August 2017 MTAC Open Session. She stated that nonprofit letters may see a higher increase but that no significant classification changes are planned, and most discount relationships would continue. The rate filing approach was approved by James Bilbray prior to his departure from the Board of Governors. No USPS promotions were approved as part of that process. The USPS anticipates that both market dominant and competitive rate changes will be effective at the same time.