September 11, 2025
Issue 25/07
The leading voice of nonprofits on postal issues for over 45 years.
Copyright 2025: Alliance of Nonprofit Mailers—All rights reserved.
The Alliance of Nonprofit Mailers is a 501 (c)(4) nonprofit organization established by nonprofits for nonprofits.
USPS receives a minimal rate authority of 1.274% for January
The USPS rate cap sits at 1.274% for January.
This morning, the Bureau of Labor Statistics released the August 2025 CPI, which increased by 2.9 percent from August 2024 and increased by 0.4 percent from July 2025 (seasonally adjusted).
The CPI price cap authority set by the Postal Regulatory Commission for the United States Postal Service stands at 1.274 percent. This is the rate authority that will be available to the Postal Service for a January 2026 rate increase, assuming that the Postal Service files for one. The rate authority imposes a cap on the weighted average rate increase for each class of Market Dominant Mail.
Will they do it?
If the Postal Service decided to hike postage rates in January 2026, it would file such a notice with the PRC before the next monthly release of the CPI index on October 15, 2025. The January increase would be based on only six months of CPI inflation.
The agency unilaterally began the practice of six-month pricing increases soon after the PRC granted the USPS supra-inflationary rate authority in late 2020. Earlier this year, at the urging of the Alliance and others, the PRC began a review of its administrative decision to allow the extra rate authority.
Subsequently, the regulator announced that it would stage the review, beginning with a proposal to limit pricing increases to once a year and to restrict reductions of work-sharing discounts. After two rounds of public comments, we await the PRC decision on the two issues. Consideration of the supra-inflationary add-ons will follow.
There are competing factors contributing to speculation about whether the USPS will act to raise rates in January.
In favor of doing it:
- Except for last January, the USPS has gone for all the incremental cash it can get from price increases on its monopoly mail products. It is a central part of the strategy to milk declining monopoly products while investing in the potential growth of competitive package shipping.
- USPS lawyers are arguing hard at the PRC against the regulator’s proposed rule to limit the agency to annual increases. To support the importance of this flexibility, the Postal Service would want to exercise its use during the regulator’s deliberations.
In favor of not doing it:
- 274% is a relatively small size increase to spread across hundreds of rate cells.
- Semi-annual rate increases are very disruptive and costly for the mailing industry, rate-paying mailers, the USPS, and the PRC. At a time when volume declines are very concerning for the future of our nation’s mail service, skipping an increase would be a prudent step to retain customers.
- The PRC recently told the USPS that it will not authorize one of the key structural changes the Postal Service proposed to make in January: the zoning of Marketing Mail and Periodicals.
This graph illustrates that a January 2026 price increase would be small relative to the prior five fiscal years. It would bring the post-PRC rule change increases to over 52% for First-Class, 51.5% for marketing mail, and 67.3% for Periodicals. There will be more in July 2026, including around 2% in “mail density” awarded for the FY 2025 mail volume decline. That is, unless the PRC changes the rules in time.
PRC defers decision on USPS proposal to zone Marketing Mail and Periodicals
- There will be no Zoning in January
The Postal Service filed a request with the Postal Regulatory Commission on June 11 that included proposed changes to the Mail Classification Schedule to allow zoned rates for some categories of Marketing Mail and Periodicals.
The PRC described the zoning proposal as follows:
“In the MCS Proposal, the Postal Service seeks approval of, among other things, the introduction of zone-based pricing for origin-entered USPS Marketing Mail and Outside County Periodicals.”
“The Postal Service described the proposed changes as ‘straightforward’ and requested approval within 60 days. However, introducing a zone-based pricing structure for USPS Marketing Mail and Outside County Periodicals raises complex issues related to workshare relationships and whether the Postal Service may unilaterally define what constitutes worksharing, and has been the subject of numerous comments. Resolution of the complex issues raised by Proposal One and the portion of the MCS proposal that introduces zone-based pricing for origin-entered USPS Marketing Mail and Outside County Periodicals on the expedited basis requested by the Postal Service is therefore not practicable. …”
In an August 14 order, the PRC approved several elements of what the USPS had proposed, but not price zoning:
“The Commission will continue to review the portion of the MCS Proposal that introduces zone-based pricing for origin-entered USPS Marketing Mail and Outside County Periodicals, the related MCS changes, and Proposal One in these consolidated proceedings. Although the Commission intends to complete review of these more-complex proposals in a timely manner, the Commission advises the Postal Service that, if it intends to file a price adjustment case in October 2025, it should not anticipate approval
of these proposals before that time.”
One of the main reasons that the PRC refused to accept that the zoning was “straightforward” was a filing by a group of mailer associations, including the Alliance: Comments of John C. Panzar on Behalf of the Alliance of Nonprofit Mailers, the American Commerce Marketing Association, the Association of National Advertisers, the Association of Postal Commerce, the Major Mailers Association, the National Association of Presort Mailers, the National Postal Policy Council, and the Package Shippers Association, July 11, 2025.
Nonprofit mail volumes are being driven down by supra-inflationary postage rate increases
Rate increases well above inflation are driving nonprofit mail volumes down. The new Postal Regulatory Commission rate rules that started in 2021 are greatly increasing the rate of nonprofit mailer decline.
Over the last 20 years, mailers have navigated the Great Recession, a 4.3% exigent surcharge, the pandemic, and a new rate-making system that allows for increases several times greater than inflation. All four of these events have driven nonprofit mail volumes lower.
The most rapid rate of nonprofit mail volume decline has occurred since the PRC put in place new rate-setting rules that allow the United States Postal Service to add onto the Consumer Price Index (CPI) cap installed by Congress in 2006, and the USPS piled on by increasing the frequency of rate hikes to every six months.
Needless to say, the Alliance of Nonprofit Mailers argued very strongly at the PRC against these new rules. We presented sworn declarations by our board members on behalf of their organizations, expert witness testimony about the misguided approach proposed by the PRC, and predictions of exactly what has happened following the implementation of the new rules.
Under the new PRC rules, nonprofit mail volumes have declined by an average of 4.5% annually from FY 2021 to 2024.
Over the prior 15 years, nonprofit mail volumes declined by an average of 1.7% annually. The new rules increased the annual rate of decline by 2.67 times versus the previous 15 years.
Between the end of the Great Recession in 2010 and the beginning of the supra-inflationary rate authority in 2021, non-profit mail volumes declined by an average of 1.2% annually. The recent 4.5% rate of decline is 3.75 times the previous 11-year rate of 1.2%.
The PRC is currently reviewing those rules, and the Alliance of Nonprofit Mailers is advocating a return to the CPI price cap with once-a-year rate increases. Nonprofits want to mail more, but they can’t afford to keep up with the USPS price increases.
USPS clarifies the definition of a postmark in the wake of RTO
The Postal Service wants to change the definition of a postmark from when it first receives a mailpiece to something less specific. The change appears to be driven by the Regional Transportation Optimization (RTO) initiative that slows down mail that originates at thousands of rural post offices. As postmarks are applied by automation in most cases, the delay between receipt at a post office and movement of the mail to a processing plant adds one to three days under RTO. As USPS said in the August 12 Federal Register, “The RTO initiative will make the scenario where a postmark date does not align with the date that the Postal Service first accepted possession of a mailpiece more common.”
The Postal Service attempted to describe the real meaning of a postmark: “Although every postmark contains a date, that date does not inherently align with the date that the Postal Service first accepted possession of a mailpiece. Rather, the postmark date represents the date on which a mailpiece was accepted at a retail location, or the date of the first automated processing operation performed on that mailpiece at a processing facility. Most postmarks fall into the latter group—that is, they are applied by machines in originating processing facilities. A mailpiece is not always entered into an originating processing facility on the same date that it was first tendered to the Postal Service, nor is it always processed on the same date that it arrived at a processing facility.”
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