The Postal Service is hiking prices. Starting Jan. 27, the cost of a first-class stamp goes up by a penny to 46 cents. The price for sending junk mail and packages will also increase. Will the extra revenue be enough to blot up the sea of Postal red ink?

In fiscal 2012, the Postal Service lost almost $16 billion. The price hike for all types of mail averages out to around 4 percent, just enough to outpace inflation. Not enough to stem the losses at the Post Office. Karen Meehan is a Postal Service pricing manager. I ask her, given the gaping budget hole, isn’t the price rise just a drop in the bucket?

She says, “It won’t close the gap, but every drop helps.”

Historical Prices of the Forever Stamp

January 27, 2013: $0.46
January 22, 2012: $0.45
May 11, 2009: $0.44
May 12, 2008: $0.42
April 12, 2007: $0.41

Rick Geddes is a Cornell economist. He’s studied the Postal Service since the mid ‘90s. He says the higher rates will help. But the Postal Service has to be careful. If it raises prices too much, it’ll lose customers.  

He explains, “People will think, instead of sending a holiday or greeting card, they might send an e-card, if the price of a stamp goes up.”

Geddes says the Postal Service is already losing the battle with online convenience. He says first class mail volume has dropped by about a third since 2001.