Stamp Price Increase — Save on Postage by Buying Stamps This Week

While I’m not one to dole out financial advice (and neither is this blog), there’s one investment you should probably make in the next 7 days unless you’d like to address all your bills, thank you notes and wedding invitations to Ripoffsville this year. The price of a stamp is about to skyrocket on Sunday, January 26th and your best way around it is to invest in some Forever stamps before the postage increase.

What do I mean by “skyrocket”? Ultimately, the price of a stamp is only going up by 3-cents… from 46 cents to 49 cents. Doesn’t seem like a big deal, right? Well, percentage-wise, this is a 7% stamp price increase! By buying Forever stamps, you’d save 6 percent! …You still don’t seem persuaded. I get it… It’s barely even as good as a Bed, Bath and Beyond coupon.

Buy postage stamps

Let’s look at it this way: historically, the price of a stamp has barely even kept pace with inflation — so, in a way, first class letter postage has actually gotten cheaper and cheaper each year. For instance, a 32 cent stamp in 1995, adjusted for inflation, would have been worth worth 49 cents in 2013. By comparison, this makes our actual 2013 rate, 46 cents, look like a bargain. And this historical pattern of inexpensive postage has persisted for quite a long time. In fact, something called the Postal Accountability and Enhancement Act of 2006 was supposed to force the USPS to raise stamp prices no faster than the rate of inflation. Forever stamps should never be a good deal, because legally speaking, stamp price increases should never exceed inflation.

Counter to all this, the USPS filed a request for an “exigent” price increase (by complaining about the Great Recession) and it was approved by the Postal Regulatory Commission. So, now the price of a stamp is actually bumping up to a full 49 cents — an increase of 6.5% — clearly higher than the rate of inflation. Inflation over the course of 2014 (which we can assume will be at least 1%) will remove the purchasing power of your postage budget as the year wears on. These economics will finally make this stamp price hike a bad one for consumers.

TL;DR: Buy some Forever stamps this weekend and thank me at the end of the year when you’re sending Christmas cards at a 6% discount. If not for the sake of beating the system, saving one more trip to post office hell will easily pay for many more stamps.

History of the Price of a Stamp

Generations before us, folks paid pennies to send a letter across the country. But times have changed and over the decades, the price of a stamp has ballooned from only a few cents to almost half a dollar. The table below charts the precise stamp price increases and the dates of their introductions. Using the table, you can get an idea of how the price of a stamp has changed over a timeline of over 100 years in the United States.

Before you see the table, you might like to understand the changes it demonstrates. Although it seems like the price of a stamp has risen at an alarming rate, this mostly has to do with inflation. Let’s find out why. The graph below depicts the price of a first class stamp in two different ways: the dark blue section shows the actual price of a stamp as it’s listed in this table against the year the price was in effect; the second shaded section in light blue shows the inflation adjusted price of a stamp using the value of US cents in 2008.

Stamp Price History

The price of a stamp over time compared to its inflation-adjusted price.

This inflation-adjusted graph proves that the price of a stamp has remained surprisingly stable over more than a century. This is because even though the cost of postage was increasing steadily, the value of the US dollar was inflating. That inflation means that the purchasing power of the cent was going down. With the purchasing power falling and the prices going up simultaneously, the net result is a stable stamp price.

Some of the sudden jumps up and down in the graph can just be explained by some of the the earliest stamp price changes. If you look at the table below you can see that since the stamp price was so low, an increase of just a cent means a relative increase of 50% or more. Were it reasonable to change the price of a stamp in increments of partial cents, there would be a less perceptible change in those areas of the graph. So, these changes had less to do with irrational inflation or pricing and more to do with relative changes in price.

Date of Price Change Price of a Stamp in Dollars
03/03/63 .06 (.03 per half ounce)
03/03/83 .04 (.02 per half ounce)
07/01/85 0.02
11/03/17 0.03
07/01/19 0.02
07/01/28 0.02
07/06/32 0.03
01/01/52 0.03
08/01/58 0.04
01/07/63 0.05
01/07/68 0.06
05/16/71 0.08
03/02/74 0.10
09/14/75 0.10
12/31/75 0.13
05/29/78 0.15
03/22/81 0.18
11/01/81 0.20
02/17/85 0.22
04/03/88 0.25
02/03/91 0.29
01/01/95 0.32
01/10/99 0.33
01/07/01 0.34
07/01/01 0.34
06/30/02 0.37
01/08/06 0.39
05/14/07 0.41
05/12/08 0.42
05/11/09 0.44
04/17/11 0.44
01/22/12 0.45
01/27/13 0.46

Here’s just one of many excellent resources on the stamp price’s history and its changes relative to inflation.