United States Postal Service Postmaster General Louis DeJoy speaks during a House Oversight and Reform Committee hearing on "Legislative Proposals to Put the US Postal Service on Sustainable Financial Footing" on Capitol Hill in Washington, DC, U.S., Febr
United States Postal Service Postmaster General Louis DeJoy speaks during a House Oversight and Reform Committee hearing on "Legislative Proposals to Put the US Postal Service on Sustainable Financial Footing" on Capitol Hill in Washington, DC, U.S., February 24, 2021. Reuters / POOL New

U.S. Postmaster General Louis DeJoy says the agency is dealing with significant inflation costs as it works to stem losses, acknowledging higher costs will put further pressure on stamp prices.

DeJoy told Reuters in a 90-minute interview late on Wednesday the U.S. Postal Service (USPS) is feeling the impact of higher costs as it works on its plan to eliminate $160 billion in projected red ink over 10 years.

"Inflation is significantly higher than we forecasted in the plan. I think we're going to incur $1.8 billion more this year in unplanned inflation," DeJoy said.

In the year ending Sept. 30, USPS reported https://about.usps.com/what/financials/annual-reports/fy2021.pdf?msclkid=20269dd6c27311ec9b8b3c650a4bc093 a net loss of $4.9 billion on revenue of $77.1 billion and $82 billion in expenses. USPS is expected to offer more details on the inflation impacts when it reports financial results on May 5.

Earlier this month, USPS filed notice with the Postal Regulatory Commission to raise prices of first-class mail stamps from 58 cents to 60 cents and raise overall First-Class Mail prices approximately 6.5% - after hiking stamps by 3 cents in August.

USPS noted the price hike was below the 8.5% annual inflation rate.

DeJoy, who cited issues like transportation and labor costs, was blunt about the anticipated impact of inflation and the need to keep hiking prices.

"I am pretty frank about it - we're raising prices. Whether I run out of cash tomorrow or three years from now I've still got a plan that's running out of cash with a 650,000-person organization," DeJoy said.

USPS won about $50 billion in financial relief from Congress under legislation signed by President Joe Biden this month. DeJoy says he still needs to eliminate about $35 billion to $40 billion in costs and raise revenue by about $25 billion over a decade to meet financial targets.

"The ball's in our court now - we've got a lot of work to do," DeJoy said.

Struggling with diminishing mail volumes despite having to deliver to a growing number of addresses, USPS has reported net losses of more than $90 billion since 2007. In February, it booked a quarterly net loss of $1.5 billion.