Consumer price indices are supposed to cover everything that households buy. That includes “administratively set prices” for various fees and taxes. Postal services is one example.
Our FRED graph above shows postal services price indexes for a few European countries. These prices typically change infrequently; thus, their evolution often looks like a step function. (This step pattern can also occur for some product categories that aren’t sampled every month, such as housing rents.)
There’s also some indication these price have changed more frequently recently. This may have to do with the “technological” innovation in some countries of labeling stamps as a service instead of a value, which makes it easier to change the price. (Read more about this menu-cost theory of price stickiness.)
Our second FRED graph, above, provides some local color: In the Netherlands and Latvia, letter postage is lower in December to encourage people to write to family and friends for the holidays. There are even special December stamps that are valid only from mid-November to early January.
Our third FRED graph, above, explores the interesting case of Denmark. The Danes have highly advanced digital communications and send few physical letters anymore. Their postage prices (solid blue line) have increased much more than their general level of prices (dashed green line). It now costs 29 Danish kroner ($4.56) to mail a domestic letter, and the Danish postal service will stop delivering letters at the end of 2025.
Then there’s the case of Turkey, shown in our final FRED graph below. They’ve had an even speedier increase in postal prices, but it’s largely due to overall inflation.
How these graphs were created: Search FRED for and select the “postal Spain” price index. From the “Edit Graph” panel, use the “Add Line” tab to search for and select the “postal Greece” and “postal France” series. From the “Format” tab, change the line patterns to make the separate steps more apparent. Use a similar process for the other graphs.
Suggested by Christian Zimmermann.