By David Shepardson
WASHINGTON (Reuters) – U.S. Postmaster General Louis DeJoy said the agency faced significant inflationary costs as it worked to stem losses, acknowledging that higher costs would put further pressure on stamp prices.
DeJoy told Reuters in a 90 Minutes interview on Wednesday that the United States Postal Service (USPS) was feeling the impact of rising costs as it worked on its plan to eliminate $160 billion of red ink splashed on 10 years.
“Inflation is significantly higher than what we projected in the plan. I think we’re going to incur $1.8 billion more this year in unplanned inflation,” DeJoy said.
In the year ending September 30, USPS reported https://about.usps.com/what/financials/annual-reports/fy2021.pdf?msclkid=20269dd6c27311ec9b8b3c650a4bc093 a net loss of $4.9 billion on revenues of $77.1 billion and $82 billion in expenses. The USPS is expected to offer more details on the impacts of inflation when it releases its financial results on May 5.
Earlier this month, the USPS filed a notice with the Postal Regulatory Commission to raise prices for first-class postage stamps from 58 cents to 60 cents and raise overall prices for first-class mail by around 6.5% – after raising stamps by 3 cents in August.
The USPS noted that the price increase was below the annual inflation rate of 8.5%.
DeJoy, who cited issues such as transportation and labor costs, was candid about the expected impact of inflation and the need to keep prices rising.
“I’m pretty candid about it – we’re raising prices. Whether I run out of money tomorrow or three years from now, I always have a plan that’s out of money with an organization of 650,000 people,” said DeJoy.
The USPS got about $50 billion in financial assistance from Congress under legislation signed by President Joe Biden this month. DeJoy says he still needs to eliminate about $35 billion to $40 billion in costs and increase revenue by about $25 billion over a decade to meet his financial goals.
“The ball is in our court now – we have a lot of work to do,” DeJoy said.
Struggling with declining mail volumes despite delivering to an increasing number of addresses, USPS has recorded net losses of more than $90 billion since 2007. In February, it recorded a quarterly net loss of 1.5 billion dollars.
(Reporting by David Shepardson in Washington; Editing by Matthew Lewis)