WASHINGTON (CNNMoney) -- Mailing a letter will cost three cents more, or 49 cents, starting in January, according to a proposal from the U.S. Postal Service Wednesday.
The price of sending a postcard would also go up by a cent to 34 cents. The rate hikes are expected to raise $2 billion for the cash-strapped postal service.
The Postal Service must first get the approval of its regulatory panel, Postal Regulatory Commission, before it can raise prices over the rate of inflation.
"Of the options currently available to the Postal Service to align costs and revenues, increasing postage prices is a last resort that reflects extreme financial challenges," the Postal Service Board of Governors Chairman Mickey Barnett Barnett said in a letter to customers.
The agency said it lost $740 million in the three months that ended June 30. During the same period last year, it reported a $5.2 billion loss.
So far, the Postal Service has lost $3.9 billion in the current fiscal year. It lost $16 billion in 2012.
But total mail volume continued to fall. The Postal Service handled 37.9 billion pieces of mail between April and June, down from 38.3 billion in the same period last year.
In his weekly conference call, News 8 asked Iowa U.S. Senator Chuck Grassley about the the Postal Service's financial issues. He says last year, the U.S. Senate passed legislation that would overhaul the Postal Service, but it died in the U.S. House. However, he says Senate leaders have worked on a bill similar to the one from last year and he says he thinks it will be a high priority in the Senate.
Meanwhile, he says if the Postal Service wants to raise stamp prices more than the Consumer Price Index, it may not be so easy.
"Law only allows them to do so much," he told News 8. "That's why it tends to go up a penny at a time. If they want to do it more than that, I think they're going to have to get a bill through Congress because the present law only allows an increase in postal stamps according to the CPI."