Kent Patrick: Postage stamps, inflation and an investor’s dilemma
Inflation is a structural force that affects how we spend, save, invest

Published 1:00 am Saturday, July 26, 2025

In July 2025, the cost of mailing a letter in the United States went up – again. The United States Postal Service increased the price of a First-Class Mail Forever stamp from 73 cents to 78 cents. 

This marks the USPS’s seventh price hike since 2021 and its 20th since 2000, a trend that has become increasingly common as the postal service grapples with mounting financial losses, including a $9.5 billion deficit in fiscal year 2024.

Alongside the new stamp price, metered mail rose to 74 cents, domestic postcards increased to 61 cents, and international letter postage climbed to $1.70. These adjustments are part of USPS’s broader “Delivering for America” reform plan, an effort to achieve financial sustainability as it faces declining mail volume and rising operational costs.

These seemingly small increases are part of a much larger economic picture shaped by inflation – one that affects not just postal prices but the purchasing power of consumers and the financial strategies of investors. Understanding how postage stamps relate to broader inflation trends provides a useful lens through which to analyze the economic forces impacting everyday life.

Consumer Price Index = Inflation

The Consumer Price Index, published monthly by the Bureau of Labor Statistics, offers a snapshot of inflation by measuring the average change in prices across a standardized “basket” of goods and services.

This includes everything from groceries and rent to transportation and medical care. According to the most recent CPI release, consumer prices rose .3% in June 2025 compared to the previous month, bringing the year-over-year inflation rate to 2.7%.

While not alarmingly high, this uptick marked the sharpest monthly increase since January and was attributed in part to tariff-driven price increases on imported goods. Core CPI, which excludes the volatile food and energy sectors, also rose .2% for the month and 2.9% over the past year, signaling that inflationary pressures remain embedded in the economy.

Stamp prices over the last 40 years

To evaluate whether postage stamp prices have kept pace with inflation, we can look at their trajectory over the past several decades. In 1985, a first-class stamp cost 22 cents. Adjusted for inflation, that’s roughly equivalent to 78 cents in today’s dollars – suggesting that the new rate is actually in line with long-term price trends. In fact, while stamp prices have doubled in nominal terms since the early 2000s, they’ve largely moved in tandem with inflation as measured by the CPI.

This shouldn’t be surprising; USPS is statutorily allowed to raise rates in accordance with inflation and often does so in response to external economic pressures like fuel costs, labor contracts, and declining demand for physical mail.

More than just stamps

Still, inflation is not just about stamps – it’s a persistent and powerful force that erodes purchasing power over time. For investors, this means that simply preserving capital isn’t enough; it must also grow at a rate that outpaces inflation. A bond yielding 3% might appear adequate, but if inflation is running at 2.7%, the real return is barely positive.

Inflation also affects sectors differently: while some equities may benefit from rising prices, fixed-income investments tend to lose value unless they’re inflation-protected. Treasury Inflation-Protected Securities, commodities, real estate and dividend-growing stocks are common hedges used in diversified portfolios.

Moreover, inflation has policy implications that indirectly shape investment returns. The Federal Reserve closely monitors CPI figures when setting interest rates. A sustained rise in core inflation could delay expected rate cuts or even prompt future hikes, influencing both equity valuations and bond yields. The June CPI report, showing stronger-than-expected inflation, already prompted speculation that the Fed might adopt a more cautious stance in the coming quarters.

In this context, even something as mundane as a postage stamp becomes a meaningful indicator. The recent USPS price hike reflects not only operational challenges but also broader inflationary dynamics. Over time, these small adjustments compound, just as inflation slowly chips away at the value of savings, pensions, and fixed income. Investors who ignore inflation do so at their peril.

Kent Patrick is with Bush Wealth Management. This information should not be construed by any client or prospective client as the rendering of personalized investment advice.  For more information, visit BushWealth.com for its full disclosures.