The United States Postal Service, reeling from plunging mail volumes and huge revenue shortfalls, said the cost of a first class stamp will rise by one cent to 45 cents, effective January 22, 2012.

In addition, postage on post cards will climb by three cents to 32 cents; while letters sent to Mexico and Canada will require 5 more cents in postage to 85 cents. Mail sent to other foreign destinations will cost 7 cents more to $1.05.

The overall average price increase is small and is needed to help address our current financial crisis, Postmaster General Patrick Donahoe said in a statement.

We continue to take actions within our control to increase revenue in other ways and to aggressively cut costs.

The Postal Service is in dire need of restructuring – with mail volume having plummeted 20 percent over the past four years, the agency has suffered net losses of a staggering $20 billion.

In fiscal 2010 alone, the Postal Service recorded an enormous $8.5 billion net loss, versus $3.5 billion in the prior year.

Donahoe, meanwhile, is desperately seeking to reduce costs in order to keep the postal service viable. He would like to cut up to 120,000 jobs, but that would require the approval of the U.S. Congress.

He also wants to shut down Saturday mail delivery and drastically restructure employee benefits, including government health care and retirement plans.