Canada Post Corporation announced in the Canada Gazette a one-cent increase (2 %) in the domestic basic letter rate as well as its
proposed increases for USA and International letter rates for implementation on January 16, 2006.Under the price-cap formula approved by the federal government in 2000, basic letter rateincreases, when warranted, will not exceed 66.67 percent of inflation as measured by the ConsumerPrice Index from May prior to the last increase to May of the current year. Increases will beimplemented no more than once a year, in January, and announced six months in advance in the Canada Gazette Part I.The Consumer Price Index from May 2004 to May 2005 shows an increase of 1.6 per cent. Under theprice-cap formula, 66.67 per cent of the CPI increase plus the unused portion related to theJanuary 2005 increase, permits a one-cent increase in the basic letter rate. Even at the new rateof 51 cents, Canadians will still enjoy one of the lowest domestic basic letter rates amongindustrialized nations. Canada Post announced in the Canada Gazette Part 1 the following proposedrate adjustments that will come into effect January 16, 2006.
- $0.04 increase to $0.89 for letters, cards and postcards up to 30g destined for the USA;
- $0.04 increase to $1.49 for letters, cards and postcards up to 30g to foreigndestinations.
Canada Post’s proposed rates for a 30-gram letter to the USA and other Internationaldestinations compare favourably to the rates other countries charge to send a similar piece of mailto Canada. It costs $2.50 from Great Britain, $3.23 from Germany and $1.72 from Australia to send a30-gram letter to Canada. The cost to mail a 30-gram letter from the USA to Canada is $1.11.
According to Canada Post the Rate increases are necessary to keep pace with inflation, directoperating costs and the need to reinvest in network infrastructure to meet customer demands. Fuelcosts, for example, have risen 10 per cent since 2003.Another source of increased cost is terminaldues, a pricing mechanism that allows the postal administration receiving mail for delivery tocollect for the cost of delivery from the postal administration sending the mail (in this caseCanada Post). Terminal dues to the United States and other destinations are expected to increase by2006.
