I had to buy some stamps today -- a thing I haven't done in quite a while. I was surprised by how expensive they were ($0.78). This got me to thinking about what it would be like to measure inflation solely by the US postal rate.
Between 1925 ($0.02) and 2025 ($0.78), the U.S. first-class postage rate grew at an average nominal rate of about 3.7% per year.
Now, this is an average and the reality is more lumpy. I made a chart:
Unfortunately, the US postal service does not actually charge what it costs to deliver the mail (I'm simplifying things a little, apparently the post office does more than deliver the mail). However,
Since the 1971 Postal Reorganization Act, USPS has been a self-funding agency, relying almost entirely on revenue from postage, products, and services—not taxpayer support—for its operations. source
And indeed this wonderful chart shows us how much money the post service has been losing lately:
So, now what we need to do is figure out how much stamps would have cost if they weren't being subsidized every year. Based on the number of pieces of mail delivered each year and the losses showed in the chart above, I got chat to predict how much the USPS should have been charging.
USPS would have needed rates 2–6¢ higher per letter on average to break even. In extreme deficit years (like 2011), the gap was closer to 9¢.
So, if we assume that the postal rate should currently be $0.04 higher than it is, we come up with an inflation rate over the last 100 years of $0.79 -- which isn't that much higher than what I had figured earlier.
Comparing this with the official CPI rate:
- According to CPI data, $1 in 1925 would be worth about $18.46 today. source
- This corresponds to an average annual inflation rate of 2.96% per year over that period
I guess you can add the postal rate inflation to your list of other inflation indicators (if you find that kind of thing useful). But you probably don't need to worry about adjusting for whatever subsidy the USPS gets.