Stamp prices go up one penny. Is it enough to save the Postal Service?

The cash-strapped U.S. Postal Service announced on Tuesday a one-cent increase in the cost of mailing a letter, starting in January.

The new prices lift the cost of a first-class stamp to 45 cents starting on January 22, 2012, the first increase in more than two years.

The Postal Service is facing a financial crisis because mail volumes have declined as more people use electronic mail or the services of private sector competitors such as FedEx and United Parcel Service.

The Postal Service said the cost to mail a postcard will go up three cents to 32 cents, letters to Canada or Mexico will increase five cents to 85 cents, and letters to other international locations will increase seven cents to $1.05.

The agency, which is allowed to raise prices in line with the rate of inflation, said it filed the new prices with the Postal Regulatory Commission on Tuesday. The regulator has 45 days to approve the changes.

Until the price changes take effect, consumers can still purchase 44-cent Forever stamps, which do not require additional postage after prices go up.

"The overall average price increase is small and is needed to help address our current financial crisis," said Postmaster General Patrick Donahoe. "We continue to take actions within our control to increase revenue in other ways and to aggressively cut costs."

The Postal Service has asked Congress for permission to drastically overhaul its business, including cutting Saturday mail delivery and eliminating a massive annual payment to prefund retiree health benefits. The agency also is studying thousands of post offices and processing facilities for possible closure.

(Editing by Mohammad Zargham)