Commission Sets 5.4% Increase For Most; 12% For Some

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WASHINGTON ( -- The Postal Rate Commission today approved a 5.4% hike in most postal rates but altered a Postal Service proposal, making the increase far higher for some marketers of books and CDs and for some nonprofit mailers.
'Media mail' rate boosted by 12.7%.

The biggest change: a 12.7% boost in rates for “media mail,” which is generally used for sending CDs and sometimes for books. It had been expected to rise 5.4%.

Citing laws requiring all classes of mail to pay for themselves, the commission raised media-mail rates 12.7% and library-mail rates 12.6%. It cut nonprofit rates by 3% for day-to-day mail, but increased by 12.3% saturation mailing.

Allan Adler, VP-legal for the Association of American Publishers, noted that rates for bound, printed matter will rise 5.5% and said most book publishers won’t be that significantly affected.

Ian Volner, counsel for the Association of Postal Commerce, said the change could significantly affect sellers of children’s books and music.

Some concerns
Jerry Cerasale, senior VP for the Direct Marketing Association, said that while the group was pleased overall, it has concerns. “We are never pleased with rate increases, but for the vast majority of DMA members we have to be pleased [that there was no change from the increase the Postal Service proposed],” he said. “For classes that got double-digit increases, we don’t like that at all.”

The rates, which the Postal Service Board of Governors is expected to announce as soon as this afternoon, boost the cost of a first-class stamp to 39 cents from the current 37 cents. The move represents the first postal-rate hike since 2002, and the rates take effect early next year.

The Postal Service needs the increase for a $3.2 billion payment due in September 2006 for postal retirement benefits. Most mailing groups, while fighting to reform the Postal Service rate process, had supported a 5.4% across the board increase for now.

More hikes to come
The Postal Service is expected to seek a second rate hike next year with that increase to take effect in 2007. Meanwhile, business groups hope Congress will alter how rate hikes are calculated, lessening the need for further increases.

The Postal Rate Commission generally approved the recommended 5.4% hike that will boost rates to 18.5 cents from 17.5 cents for weekly news magazines; to 28.9 cents from 27.4 cents for household magazines; and to 21.4 cents from 20.3 cents for targeted three-digit bar-coded mail. But it surprised mailers by making three big changes in the proposal.

A lobbyist for nonprofits said the move generally keeps a 40% discount on nonprofit mailings and will help many nonprofits, but Mr. Cerasale said some larger nonprofits will be hurt.

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