The Senior Citizens League has estimated that the Social Security COLA next year would be 2.7%
An elderly woman shopping for groceries (Photo: NBC News)
Inflation Slowing Down
The Senior Citizens League observed that the inflation rates have been the lowest since March 2021. The observation was made based on the most recent data on consumer prices. COLAs are calculated by using the Urban Wage Earners and Clerical Workers‘ consumer price index, CPI-W for short. Last May, the CPI-W went up by 3.6%. This percentage was not used by the League since inflation rates keep dropping.
The Federal Reserve agrees with the League’s findings. They commented on their recent meeting that there were “lags” that affected monetary policies. These lags affected the inflation rates and the economy overall. Inflation rates could continue since interest hikes are still not included in the economy. No clear details were provided by the League as to how exactly they estimated the COLA for next year, but based on the current trend, the group implies that inflation could still decline in the coming months.
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The Reason for A Higher COLA
A lower increase in Social Security benefits than what the League projected is likely to happen. One instance suggests that it should be higher than expected. An ongoing survey conducted by the League indicates that seniors have not felt any improvements in their living costs at present. 62% of the respondents stated that the fastest increase in cost was food.
A massive drawback of the CPI-W is that it does not show the senior’s costs. CPI-E, an alternative to CPI-W, has been proposed to address some of the issues with its predecessor. As of the moment, there were no efforts to merge it with the formula of COLA’s calculations. An increase would surely be appreciated, but seniors and retirees alike should prepare for a lower increase in Social Security benefits next year.
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