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From Staff, Wire Reports

What will a penny buy nowadays?

On Monday, it will provide you with the extra coinage needed to mail a postcard, as the nation deals with another postal rate increase. This means to mail a postcard on Monday, you'll need 27 cents and 42 cents for a first-class letter.

The United States Postal Service will increase postage for other areas as well. These include:

Large envelope, 2 ounces, $1, up 3 cents.

Money Orders up to $500, $1.05, unchanged.

Certified mail, $2.70, up 5 cents.

First-class international letter to Canada or Mexico, 72 cents, up 3 cents.

First-class international letter to other countries, 94 cents, up 4 cents.

Yet these increases won't necessarily solve any financial problems the USPS is having, according to Dr. Charles Guy, former director of the Postal Service's Office of Economics and Strategic Planning.

"Raising stamp prices - even on a yearly basis - won't save the Postal Service from the significant fiscal challenges it faces," said Guy, now a senior fellow at the Lexington Institute.

Following legislation passed in 2006, USPS must keep future rate increases within the official rate of inflation. The legislation also requires the Postal Service to provide $50 billion to fund its pension obligations during the next decade.

"With stamp prices tied to the Consumer Price Index, the Postal Service can't just raise prices to meet its pension-funding requirements. That leaves it only two ways to cover costs: lowering the amount spent on labor or introducing new products that will increase revenue," said Guy.

Monday's rate hike represents the fifth price increase since 2001. Stamp prices have gone up nearly 24 percent during that time.

"Congress has made it clear that only 'extraordinary or exceptional circumstances' would allow the Postal Service to raise prices beyond the rate of inflation," said Guy. "But Congress has also resisted USPS management's efforts to control labor costs by consolidating facilities or outsourcing tasks.

"Monday's stamp price increase may provide a temporary bump in revenues, but it's not enough to solve the Postal Service's long-term financial problems," said Guy.

Forever stamps - those stamps that will cover first-class postage forever regardless of postage increases - remain a hot item with consumers with than six billion sold since their introduction last year.

"We knew the Forever stamp would be a big hit with our customers and we continue to replenish our stock to meet demand," said Postal Service Consumer Advocate Delores Killette. "We introduced these stamps as a customer convenience to ease the transition during price changes."

On Monday, Forever stamps will increase in price as well, to 42 cents. The post office sold $267,696,023 in Forever stamps in March, up from $207,900,132 in February and $115,303,031 in January.

Unlike the Forever stamps, other 41-cent stamps will require additional postage when the new rates take effect, and postal officials said they printed an additional 1.5 billion 1-cent stamps in anticipation of the demand. Also, for the first time the Postal Service has stamps available at the new rate before the change takes effect. And even as the higher rates near, the post office is seeing higher gasoline prices eat away at its budget. It has been estimated that each penny increase in the price of gas costs the post office $8 million a year. The first-class postal rate is the one that most people notice, but other prices will also rise.

Under the new law, postal prices will be adjusted each May, the Postal Service said. Officials said they plan to give 90 days notice of future changes, twice what is required by law.

While the charge for the first ounce of a first-class letter rises to 42 cents, the price of each added ounce will remain 17 cents, so a two-ounce letter will go up a penny to 59 cents.