Gene J. Puskar / AP

Gas prices are posted at a gas station in Breezewood, Pa., Falling gas prices helped lead to flat wholesale prices in March.

U.S. producer prices were unexpectedly flat in March as a drop in gasoline costs offset rising food prices, according to a government report on Thursday that also showed moderate underlying inflation pressures.

The Labor Department said its seasonally adjusted producer price index was unchanged last month after advancing 0.4 percent in February.

Economists polled by Reuters had expected prices at farms, factories and refineries to rise 0.3 percent.

Wholesale prices excluding volatile food and energy costs rose 0.3 percent after February's 0.2 percent gain.

Related story: Pump prices may have peaked, for now

That was a touch above economists' expectations for a 0.2 percent advance and marked the fifth successive month of increases in core PPI.

Over one-third of the rise in core PPI was attributed to prices for light motor trucks. Higher costs for passenger cars, soaps and other detergents also contributed to the advance in core PPI.

However, manufacturers have limited scope to pass on these increased costs to consumers given the still considerable slack in the economy.

Overall producer prices were held back by a 2.0 percent fall in gasoline, the largest decline since October, after a 4.3 percent jump in February. That offset a 0.2 percent rise in food prices, which halted three straight months of declines.

However, gasoline prices rose 7.5 percent, when seasonal factors are excluded.

In the 12 months to March, wholesale prices increased 2.8 percent, the smallest increase since June 2010, after advancing 3.3 percent in February.

Outside food and energy, producer prices were pushed up by light motor trucks prices, which rebounded 0.7 percent after falling 0.4 percent in February. Passenger car prices rose 0.8 percent after edging up 0.1 percent the prior month.

The increases likely reflected strong demand for automobiles.

In the 12 months to March, core producer prices increased 2.9 percent after rising 3.0 percent the previous month

Consumer confidence dipped in March, while Americans ratcheted up their inflation expectations to the highest level in 10 months, according to a private sector report released on Tuesday.

The Conference Board, an industry group, said its index of consumer attitudes eased to 70.2 from an upwardly revised 71.6 the month before. Economists had expected a reading of 70.3, according to a Reuters poll.

February's figure was originally reported as 70.8.

The expectations index fell to 83.0 from 88.4, though the present situation gauge gained to its highest level since September 2008 at 51.0 from 46.4.

The improvement in consumers' view of their present situation suggests that they still feel the economy is not losing momentum, Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement.

Expectations for inflation in the coming 12 months jumped to 6.3 percent from 5.5 percent. It was the highest level since May 2011.

Consumers' labor market assessment was mixed. The "jobs hard to get" index rose to 41.0 percent from 38.6 percent the month before, but the "jobs plentiful" index also rose to 9.4 percent from 7.0 percent. 

Reuters contributed to this report.

Rising pump prices helped drive up costs for consumers to their highest in 10 months in February, government data showed on Friday. There was little evidence that underlying inflation was building, however.

The Labor Department said the consumer price index rose a seasonally-adjusted 0.4 percent in February, with the gas component driving over 80 percent of the change. It was the biggest increase in 10 months.

Without food and energy prices, the so-called core index rose 0.1 percent after gaining 0.2 percent in January. The February increase was below economists' expectations in a Reuters poll for a 0.2 percent rise.

The Federal Reserve said on Tuesday that the recent spike in energy costs would likely push up inflation temporarily. Over the long-term, inflation was likely to run at or below the its 2 percent target, it said.

While the central bank reiterated its expectation that overnight interest rates would remain near zero until at least through late 2014, it offered no clues on whether it would launch a third round of bond buying or quantitative easing, to keep borrowing costs low to stimulate the recovery.

Last month, overall inflation was pushed up by gasoline prices, which soared 6 percent, the largest increase since December 2010, after rising 0.9 percent in January.

Although surging gasoline prices are a strain on consumers, they have so far not caused a sharp pull back in spending, thanks to a strengthening jobs market.

Food prices were flat last month after rising 0.2 percent in January. Food prices were the weakest since July 2010.

Overall consumer prices rose 2.9 percent year-on-year after increasing by the same margin in January.

Core consumer prices were last month restrained by apparel prices, which fell 0.9 percent - the most since July 2006 - after rising 0.9 percent in January. There were also declines in the prices of tobacco, airline tickets and used cars and trucks.

But new motor vehicle prices rose 0.6 percent after being flat in January. While housing costs held up, owners' equivalent rent rose only 0.1 percent last month after increasing 0.2 percent the prior month.

In the 12 months to February, core CPI increased 2.2 percent after rising 2.3 percent in January. This measure has rebounded from a record low of 0.6 percent in October and the Fed would like to see that closer to 2 percent.

Reuters contributed to this report.

At $15 a pop for Tide in the 100 fluid ounce container, it's not surprising thieves across the country are scrubbing store shelves clean of the laundry detergent.

Earlier this month, a Tide robber from St. Paul stole $25,000 worth of the detergent and was sentenced to 90 days in jail and five years probation, according to a story in the Pioneer Press.

And a Maryland supermarket surveillance camera caught a suspect loading his car with 15 to 20 bottles of Tide, hauling them away, and then an accomplice selling the detergent to a nail salon. The footage was aired on an NBC affiliate in Los Angeles, which reported that national retailers such as CVS were taking extra security measures to keep “Tide tied down.”

And it’s not just Tide, the NBC story found. A spokesperson for Ralphs Grocery Stores, a California supermarket chain, said the thieves are also stealing Red Bull and shampoo.

It’s not surprising that thieves are expanding their target beyond cars and jewelry these days. The cost of many consumer goods has been steadily escalating in recent years.

According to the Bureau of Labor Statistics, prices for household cleaning products spiked 4.8 percent in 2009, the highest percentage increase since 2002; and prices have only trailed off slightly since.

Out of the entire retail industry, grocery stores and supermarkets have been the hardest hit by theft in recent years, said Joseph LaRocca, senior advisor/asset protection with the National Retail Federation. In 2001, the grocery and supermarket segment reported 1.42 percent of its merchandise was stolen annually. In 2010, the sector reported losing 3.12 percent of its products. 

Higher prices can lead some consumers to buy such products via illegal means, creating a market for stolen goods, said Michael Garry, technology and operations editor for Supermarket News.

For the past five years, organized retail crime rings have been on the rise in the supermarket industry, he explained. They steal from mass merchants and resell the goods at big discounts on the Internet, at flea markets, and on street corners. “It’s a billion dollar black market out there.”

Some law enforcement officials have tied the uptick in Tide thefts to the drug trade. One story by The Daily on Monday quoted Oregon police who said drug addicts were "feeding their habit" with the proceeds.

Big chains such as Safeway and Target, Supermarket News' Garry said, now have dedicated staff that deal with the issue and work with law enforcement in an effort to crack the rings. Big cases have been solved in Florida and Maryland, he added, where merchandise worth millions of dollars was recovered.

The products the rings go after have traditionally included infant formula, razor blades, over the counter medicines, electric toothbrushes and batteries. But Tide is new to the rip-off roster. 

No one at Procter & Gamble, the makers of Tide, could be immediately reached to comment on the rash of Tide thefts. A story in The Consumerist quoted a company spokesperson as saying, "We don't have any insight as to why the phenomenon is happening, but it is certainly unfortunate." 

Stay the course. That's the message economists expect the Federal Reserve to deliver at the Federal Open Market Committee meeting Tuesday. 

"Steady as she goes," said Lawrence J. White, professor of economics at New York University's Stern School of Business. "It's not a time to be doing any major new initiatives but not yet a time to be tightening up."

The Fed is likely to reiterate observations made by chairman Ben Bernanke when he addressed Congress in January: Employment is recovering faster than anticipated, but the housing market is still in the dumps, and it's not clear that demand has recovered enough to propel continued expansion of the jobs market. "The fundamentals that support spending continue to be weak," he said.

There's also the wild card of oil prices, Mitchell O. Goldberg, president of ClientFirst Strategy Inc., points out. The mild winter experienced by wide swaths of the country combined with the low price of natural gas gave Americans a break on their heating bills. If the price of oil continues to rise, however, it could act as a brake on the recovery's momentum and cancel out better-than-expected employment numbers.

Europe's economic trouble could also throw a wrench into the recovery's momentum. "The risk of economic turmoil in Europe remains despite the current agreement on Greek debt," Joerg Dittmer, senior analyst at Frost & Sullivan, said via email. "Economic difficulties in Europe would impact the United States through reduced demand for our exports."

Above all, the Fed wants to avoid excessive optimism; it applauded the appearance of so-called green shoots in the past, only to watch the economy falter in subsequent months. 

People looking for movement on interest rates are likely to be disappointed. The Fed isn't expected to budge from its commitment to keep rates at historic lows through 2014. Inflation isn't a problem. If the economy were to bounce back suddenly, "There are other tools that the Fed can use besides raising their target rate to tamp down inflation," Goldberg said.

"They could raise bank reserve requirements. They could push lending standards to be more stringent. They could let maturing assets on their balance sheet mature without being replaced," he said. 

White said the Fed will probably let its "Operation Twist" wind down later this year as planned, and is unlikely to announce any further actions to increase the money supply. 

The Fed's other big announcement this week will be the results of its most recent round of bank stress tests. "Overall, every indication is that it will show a stronger industry than three years ago," said banking consultant Bert Ely. "That's what we'd expect because there's been lot of capital building and cleaning up of problems on bank balance sheets."

Now that the industry as a whole recovering, though, it will put more of a spotlight on banks that are still struggling. 

The U.S. economy expanded at a slightly faster pace than first estimated in the fourth quarter of last year, perhaps allaying worries of a slowdown in the start of the new year.

The Commerce Department reported Wednesday that the U.S. economy grew at a 3.0 percent pace at the end of 2011, up from its previous estimate of 2.8 percent and higher than economists had expected. It was the fastest pace since the second quarter of 2010 and a much quicker growth rate than the 1.8 percent set in the third quarter.

Economists warned not to overreact to the upward revision. "It's two tenths of a percent. I don't think that's going to change the tone of the discussion," said Tom Porcelli, chief economist at RBC Capital Markets.

While the build-up in business inventories still accounted for much of rise in output in the last quarter, the revisions to GDP unveiled an improved tone for the first-quarter growth outlook, however.

Businesses were not as aggressive in their restocking efforts, which should help to calm fears of a sharper slowdown in output this quarter.

In addition, consumer spending - which accounts for about 70 percent of U.S. economic activity - was a touch firmer than initially thought. Consumer spending rose at a 2.1 percent rate instead of 2 percent.

Even spending on home building was firmer than previously estimated and investment on nonresidential structures was modestly weak.

So far data ranging from employment to manufacturing have shown underlying strength in the economy, reducing the need for the Federal Reserve to ease monetary policy further by launching a third round of asset purchases or quantitative easing.

But surging gasoline prices, which have risen 12.6 percent or 42 cents since the start of the year and averaged $3.78 a gallon in the week through Monday, are clouding the outlook.

High gasoline prices helped to almost snuff out growth early last year. However, economists believe the impact on households this time could be mitigated somewhat by weak costs for natural gas and a strengthening labor market.

While the rebuilding of inventories added a hefty 1.88 percentage points to GDP in the last quarter, the pace of accumulation was not as fast as previously reported. Business inventories increased $54.3 billion, instead of $56.0 billion.

This suggests scope for more stock accumulation this quarter, but not at the same magnitude as the final three months of last year.

Excluding inventories, the economy grew at a 1.1 percent rate, rather than 0.8 percent. That was still a sharp step-down from the prior period's 3.2 percent pace.

Although business overall business spending was revised up, investment in equipment and software was lowered to a 4.8 percent growth rate from 5.2 percent.

Export growth estimates were also lowered, but weaker imports led to a smaller trade gap.

Reuters contributed to this report.

Drivers in the market for a used car might need to keep saving for a while longer. New data from the National Automobile Dealers Association shows the average price for a secondhand ride will go up by just under 2 percent this year, for an average of $11,850 for cars or $19,050 for light trucks. These higher prices come on top of a 3 percent increase in 2011. 

The biggest reason is that there are simply fewer used cars out there. The recession prompted automakers to slow production, which led to a sharp falloff in the number of used cars on the market in 2010. Economic uncertainty and a weak jobs market have motivated Americans to hang onto their vehicles for much longer; according to NADA stats, the average car on the road today is 11 years old. 

Climbing prices at the pump are responsible for an even bigger jump in the prices of used, compact, fuel-efficient cars. NADA predicts a 2.7 percent price jump in this category for this year. Conversely, drivers might still be able to get a bargain on a gas-guzzler; prices of large SUVs are predicted to increase by a more modest 1.4 percent in 2012.

The good news is that NADA also is predicting an increase in new car sales for the year, so the inventory crunch isn't going to last forever.

As Americans finally trade in those older vehicles they hung onto during and after the recession, NADA predict sales of 13.9 million new cars and trucks for 2012, an increase over the 12.8 million sold last year. A lack of access to financing also put a brake on used-car sales; this year, NADA predicts that lenders will make credit more available. Dealers are eager to keep up the momentum built last year, when 12.8 million vehicles were sold, so NADA predicts plenty of incentives to turn tire-kickers into buyers.

The U.S. economy perked up late last year as hiring accelerated and factories ramped up production. Unfortunately, a lot of what those factories made is still sitting in warehouses and on store shelves.

That doesn’t bode well for growth in the coming months.  

At first blush, the numbers posted by the Commerce Department for gross domestic product in the last three months of 2011 looked strong. Overall growth advanced by 2.8 percent on an annual basis, a little weaker than economists had expected based on a series of other positive economic reports. That was much better than the 1.8 percent pace in the third quarter and the best showing since the second quarter of 2010.

But much of the fourth quarter growth came from businesses restocking inventories, which swelled by $56.0 billion, adding nearly 2 percentage points to GDP growth. The so-called ”final sales” number, which tracks how much was actually sold, rose a meager 0.8 percent.

“The pickup in GDP growth doesn't look half as good when you realize that most of it was due to inventory accumulation," said Paul Ashworth, chief U.S. economist at Capital Economics. “Despite the apparent improvement in some of the incoming economic data, it still looks like ... another disappointing year."

Ashworth is among a number of private economists who see the fourth quarter growth spurt easing this year. He expects to see U.S. GDP advance by just 1.5 percent in 2012.

Federal Reserve officials echoed that prediction this week, though they’re a bit more optimistic. The central bank is looking for growth of 2.7 percent in 2012, but the latest forecast was trimmed by two-tenths of a percentage point. The Fed expects unemployment to drop as low as 8.2 percent by the end of the year.

Vote: Will the economy continue to accelerate?

The lowered growth forecast prompted central bankers to extend their pledge to keep interest rates at or near zero for another year; they now expect to hold rates at rock bottom until at least 2014 to try to encourage businesses and consumers to borrow and spend more money.

Business investment slowed sharply in the fourth quarter after heavy spending earlier last year.

Consumers continued to do their part; consumer spending grew at a 2 percent annual rate, up a bit from the third quarter. Car sales zoomed ahead as the average age of the cars and light trucks on the road hit record levels. The replacement of those worn-out vehicles helped boost car sales by 14.8 percent.

Consumers are feeling a bit better about the outlook for the economy. A separate report Friday showed the University of Michigan consumer sentiment index edging up for the fourth straight month. But the level of confidence remains weak.

“Despite the rise, this and other confidence measures remain in recession territory due to global sovereign debt fear, Congressional dysfunction, and high food and energy prices,” said economist Mike Englund at Action Economics

Consumers have also fallen back on car loans and credit cards to maintain their spending. Consumer borrowing jumped by $20.4 billion in November, the Federal Reserve said Monday. That was the third straight increase and the largest monthly gain in a decade. Consumers have boosted borrowing in 13 of the past 14 months.

The gradual improvement in the job market may explain some of the rise in borrowing. But many households are also leaning harder on debt because their wages are rising as fast as the price of the goods and services they need to buy.

Personal incomes rose at an 0.8 percent annual rate, according to Friday’s GDP report, after falling for the last two quarters. Consumer prices are climbing at an annual rate of 3 percent, according to the latest government data.

Much of that spending appears to represent people buying goods, not services. That's a sign that households are sticking to necessities, according to Joel Naroff, chief economist at Naroff Economic Advisors.

“The clearest sign that households remain cautious was in services spending,” he said. “This is the largest component of consumer demand and it fairly budged.  People are not yet comfortable buying the little luxuries in life.”

With consumers tapped out and cautious, the economy faces other headwinds in the coming year. The housing industry remains stuck in the worst recession since the 1930s. A separate report Friday showed that the pace of new home sales fell in December, making 2011 the worst sales year since the Commerce Department first began collecting the data in 1963. Sales in December fell to a seasonally adjusted annual pace of 307,000 – less than half the 700,000 that economists say represents a healthy pace.

Slack sales have forced builders to slash prices, which has kept many would-be buyers on the fence until they see signs that the market has bottomed. The median sales prices for new homes dropped in December by 2.5 percent to $210,300.

Though ultra-low mortgage rates have made home buying more affordable than it has been in decades, mortgage bankers remain very choosy about to whom they’ll lend. Some 12 million potential “move-up” buyers are stuck with mortgages that are bigger than their homes are worth.

Growth in the fourth quarter was also held back by big cuts in government spending, which lopped 0.9 percent from fourth-quarter GDP.  That belt-tightening will likely continue.

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Another set of successful bond auctions in Europe and a decline in applications for unemployment benefits are pushing U.S. stocks towards a higher opening Thursday.

Dow futures are up 38 points to at 12,542. The broader Standard & Poor's 500 futures rose 5 points to 1,307. The Nasdaq composite is up 10 points to 2,431.

The number of people seeking unemployment benefits plummeted last week to 352,000, the fewest since April 2008. The decline added to recent evidence that the job market is strengthening.

Solid earnings from Bank of America and Morgan Stanley bolstered the prevailing optimism. Bank of America returned to profit in the final three months of the year while Morgan Stanley narrowed its losses.

In a sign that investor nervousness over the euro zone's debt crisis was easing, Spain and France both drew strong demand at government debt auctions. 

Talks between Greece and its creditors were proceeding, sources said, but much more progress was needed before a deal was reached on a bond swap. 

Eastman Kodak Co filed for bankruptcy protection and said it obtained a $950 million, 18-month credit facility from Citigroup. 

European shares were higher, trading just below a 5-1/2-month high, as investors awaited the outcome of the Greek talks. 

Asian shares rose to a two-month high on hopes that the International Monetary Fund would boost its resources to help tackle the euro zone debt crisis.

Reuters and The Associated Press contributed to this report.

Eric Risberg / AP

Mei Chou, left, a sales director with Mary Kay Cosmetics, interviews Liza Cruz, right, at a Career Fair event in San Francisco, Wednesday, Jan. 18, 2012. The number of people seeking unemployment benefits plummeted last week to the lowest level since April.

New applications for unemployment benefits dropped to near a four-year low in the latest week, government data showed Thursday, providing further evidence that the U.S. job market has gained a bit of momentum.

The Labor Department reported that seasonally adjusted jobless claims fell 50,000 in the week ended Jan. 14, to 352,000 from a revised 402,000 the prior week. Economists polled by Reuters had expected claims to fall only to 385,000.

The 4-week moving average, considered a better gauge of labor market trends because it smooths out wrinkles in the data, was 379,000, a decrease of 3,500 from the previous week's revised average of 382,500.

"We have to see if there are some seasonality issues involved here, but on the surface this number looks to be very positive and is pretty much consistent with other data we've seen recently that suggest improvement in underlying fundamentals in the U.S.," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

Meanwhile the agency also reported that consumer prices were flat for a second straight month in December as gasoline fell and food rose moderately, suggesting scope for further monetary easing should economic growth falter.

Inflation appears to be peaking after rising steeply last year. Prices rose 3 percent in 2011, up from a 1.5 percent pace in 2010 and the most since 2007. But that's down from the 12-month increase of 3.9 percent in September.

Lower inflation gives consumers more spending power, which boosts growth. It also gives the Federal Reserve more leeway to keep interest rates low and take other steps to boost the economy.

A Labor Department spokesman cautioned that volatility in the jobless claims data at this time of year is common. Applications jumped two weeks ago, largely because companies laid off thousands of temporary workers hired for the holidays.

When weekly applications fall consistently below 375,000, it usually signals that hiring is strong enough to push down the unemployment rate.

Hiring improved in the second half of 2011. In December, employers added 200,000 jobs. That marked the sixth straight month in which the economy added at least 100,000 jobs. And the unemployment rate fell to 8.5 percent, a three-year low.

For all of 2011, the economy added 1.6 million jobs. That was up sharply from 940,000 in 2010. Economists say they expect roughly 1.9 million more jobs to be added this year, according to a survey by The Associated Press.

Still, the job market has a long way to go before it fully recovers from the damage of the Great Recession, which wiped out 8.7 million jobs. More than 13 million people remain unemployed. Millions more have given up looking for work and so are no longer counted as unemployed.

The manufacturing sector remains a bright spot. Factory output jumped 0.9 percent in December, the Federal Reserve said this week. That was the sharpest monthly gain in a year. Manufacturing gained 225,000 jobs last year, the most since 1997.

The pickup in hiring reflects stronger economic growth. The economy likely grew at an annual rate of about 3 percent in the final three months of last year, economists estimate.

That would be a sharp improvement over the 1.8 percent annual growth rate in the July-September quarter. Rising consumer spending is thought to be fueling much of the gain in the current quarter.

Even so, economists worry that growth could slow in the first half of 2012. Europe is almost certain to fall into recession because of its financial troubles.

And wages failed to keep pace with inflation last year. Without more jobs and higher pay, consumers might have to cut back on spending. That would weigh down growth next year. Consumer spending accounts for about 70 percent of the economy.

Reuters and The Associated Press contributed to this report.

For msnbc.com's panel of economic forecasters, the most pessimistic were the most accurate this year as the economy failed to meet even the relatively modest expectations of most experts.

David Rosenberg, the Canadian economist frequently known for his bearish views, takes the prize this year for the closest forecast among the 12 economists on our panel.

Gluskin Sheff

David Rosenberg says "retirement will become an increasingly elusive dream for many."

Rosenberg, chief economist for Gluskin Sheff & Associates, a wealth management firm, wins honors mainly because he correctly anticipated a year ago that 2011 would be a year of slow growth. Rosenberg projected U.S. economic growth of 2.3 percent for this year, compared with current projections that put GDP growth at just 1.7 percent for the year.

Rosenberg sees plenty of peril in the year ahead, especially with Europe in the midst of what he describes as a recession and China coming down from a heady period of rapid growth.

"2012 is probably going to be even more of a challenging year than 2011," he said.

While industrial companies have been driving the weak economic recovery for the past two years, they will be pressured this year by the strengthening dollar and the weakening of their primary markets in Asia and Europe, he said.

The expected expiration of Bush-era tax cuts at the end of 2012 also will cause anxiety and dampen consumer spending as Americans boost their personal savings in anticipation of lower take-home pay, he said.

While the labor market is "healing," most of the growth is in low-wage industries such as retail and hospitality, while high-paying industries such as manufacturing and finance are laying off workers, Rosenberg said. As for housing, sales activity has picked up but prices are still declining, which has a negative impact on consumer confidence and perceptions of wealth.

Rosenberg just barely beat UCLA's Ed Leamer, another frequently bearish forecaster. Our methodology looked at how accurately forecasters predicted overall economic growth, consumer inflation, unemployment and short-term interest rates.

Most panelists, including Rosenberg, were overly pessimistic about the employment market, which has been weak but not quite as bad as some had feared. Most economists predicted the unemployment rate would remain above 9 percent for the full year, but a sharp drop last month puts the current rate at 8.6 percent.

Most economists on our panel badly underestimated inflation, predicting consumer prices would rise less than 1 percent in 2011, compared with the actual 2.2 percent rate, excluding volatile food and energy prices.

Most economists predicted correctly that the Federal Reserve would leave interest rates at their current level of about zero percent, which the central bank has now virtually promised to leave in place through at least mid-2013.

With this ninth edition of our annual economic roundtable we are suspending the feature, although we continue to turn to our experts frequently for their regular analysis of the economy.

This year, for a change, we are turning to a different kind of expert and asking small business owners what they think about the prospects for the economy. We will be checking back with them often for their views on the economy.

Kathy Kmonicek / AP

Neither rain nor snow stays this courier from his appointed round, but budget problems are another matter entirely for teh embattled Postal Service.

The cash-strapped U.S. Postal Service is raising rates for its more profitable express mail and priority mail shipping next year, part of its efforts to stave off bankruptcy.

The new prices, which take effect Jan. 22, include the introduction of a new flat rate of $39.95 for overnight express mail boxes weighing up to 70 pounds that are sent domestically; the flat rate for express letters is being increased separately to $18.95. Previously, prices for the overnight service were $13.25 or higher based on package weight and distance.

The prices for priority mail, which promises two-to-three-day delivery, also will increase by an average of 3.1 percent.

The post office said the rate hikes were partly aimed at keeping the ailing agency afloat while maintaining its pricing advantage in the shipping business. Private companies such as UPS and FedEx, which offer similar express shipping services, regularly adjust their prices and have posted modest profits in the sluggish economy.

In the past year, the post office lost $5.1 billion, mostly due to a 5.8 percent decline in revenue for first-class mail. Priority mail and express mail posted a 6.3 percent increase.

Still, the rate increase will make only a small dent in the Postal Service's losses, caused by the recession, movement of mail to the Internet and a requirement that the agency fund future retiree medical benefits years in advance.

Among the increases set for Jan. 22:

• Priority mail, small box, $5.35.
• Priority mail, medium box, $11.35.
• Priority mail, large box, $15.45.
• Priority mail, regular envelope, $5.15.
• Priority mail, legal-size and padded envelope, $5.30.

The new prices amount to an across-the-board increase of roughly 5 percent in postal shipping services. They are in addition to a previously announced 1-cent increase in first-class mail to 45 cents, also planned for Jan. 22. The independent Postal Regulatory Commission will review the proposed increases before they take effect.

Postmaster General Patrick Donahoe has warned that the post office could face bankruptcy next September unless Congress acts quickly to give the agency greater flexibility to close underperforming offices, reduce delivery to five days a week, raise stamp prices and reduce health care and other labor costs. The Postal Service, an independent agency of government, does not receive tax money for its operations.

Separate bills have passed House and Senate committees that would give the post office additional authority and liquidity to stave off immediate bankruptcy, although Donahoe says neither goes far enough to address longer-term budget problems.

In the event of a shutdown, private companies such as FedEx and UPS could handle a small portion of the material the post office moves, but they do not go everywhere. No business has shown interest in delivering letters everywhere in the country for a set rate of 44 or 45 cents for a first-class letter.

"We're in a deep financial crisis today because we have a business model that's tied to the past," Donahoe said this week. "We are expected to operate like a business but don't have the flexibility to do so."