Stamp Gouging? Stamp Scalping?

WASHINGTON (AP) — “Buy those Forever stamps now. The cost of mailing a letter is going up again.  Fighting to survive a deepening financial crisis, the Postal Service said Tuesday it wants to increase the price of first-class stamps by 2 cents — to 46 cents — starting in January. Other postage costs would rise as well.  The agency’s persisting problem: ever-declining mail volume as people and businesses shift to the Internet and the declining economy reduces advertising mail.”

MP: Over the last 90+ years, the average retail price of gasoline has increased about 11.7 times, from 25.5 cents per gallon in 1919 to a projected $2.98 per gallon in 2011, according to annual gas price data from the EIA.  That’s slightly less than the projected 12.9 time increase in the Consumer Price Index from 1919 to 2011 (see EIA data), meaning that the real price of gas has fallen over this period.  Over the same period, the price of a first-class stamp in the U.S. has increased 23X, from 2 cents in 1919 to 46 cents in 2011 starting next year if the rate increase is approved (historical stamp price data available here).  That means that first-class stamps have gone up in price at about twice the rate of both gasoline prices and overall consumer prices in general.

The chart above compares stamp prices, retail gas prices and the CPI using an index that is equal to 100 in 1919 for all three series, and includes the CPI index from 1919-2011, also equal to 100 in 1919. If stamp prices had increased over time at “only” the rate of gas prices, a first-class stamp would only cost only about 24 cents today instead of 44-46 cents. If stamp prices had increased at the same rate as consumer prices in general, stamps today would cost about 26 cents.

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About Mark J. Perry 262 Articles

Affiliation: University of Michigan

Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan.

He holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University in Washington, D.C. and an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota.

Since 1997, Professor Perry has been a member of the Board of Scholars for the Mackinac Center for Public Policy, a nonpartisan research and public policy institute in Michigan.

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2 Comments on Stamp Gouging? Stamp Scalping?

  1. Invest in forever stamps. You'll get 4.4% annual growth if you want to sell them years down the road or can always use them later on having locked in the 44 cent rate.

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