The U.S. Postal Service, the world's biggest provider of mail delivery, said it will raise rates in May to help make up for slower economic growth and a decline in mail volumes.

The post office is counting on the rate increase and cost-cutting in its plans for the 2007 fiscal year, the Postal Service Board of Governors said Tuesday in a statement on PR Newswire.

The Postal Service previously requested a 3 cent increase in the first-class rate. The agency said today that it assumes the increase will take effect in May.

The Postal Service, which delivers 212 billion items a year, last increased first-class postage to 39 cents from 37 cents in January. The move funded an escrow account required by Congress.

The Postal Service said it plans to reduce expenses next year by $1.1 billion and will trim 40 million work hours below 2006 levels. The post office's media-relations office didn't return a call for comment.

Mail volumes are expected to decline 0.5 percent next year, including a 2.8 percent drop in the volume of first-class mail, the post office said.