Seniors Should See Increase in Social Security in 2014
If the government had not been shut down on October 1, the Bureau of Labor Statistics would have released the consumer price index for September on Tuesday morning. September’s data, together with the data for July and August, provide the basis for the annual cost of living adjustment for Social Security.
While we do not yet have September’s data, based on the data from the prior two months, it is likely that the COLA will end up being either 1.5 or 1.6 percent, depending on exactly what the September data show. It is unfortunate that this number is not yet available.
It is striking to note that the COLA provided by the current index, the consumer price index for wage and clerical workers (CPI-W), is likely to show a lower rate of inflation than the BLS experimental elderly index (CPI-E), which is designed to reflect the purchasing patterns of the elderly. The biggest differences between the two indexes are the weights assigned to health care and housing, with both components accounting for a much larger share of the CPI-E than the CPI-W.
The price of medical care services was up 3.1 percent in August from its year-ago level. The price of the CPI’s shelter component was up 2.4 percent from its year-ago level. As a result of the more rapid price increases in these components, the CPI-E would likely show a rate of inflation 0.1-0.2 percentage points higher than the CPI-W. This would suggest that the rate of inflation seen by seniors is somewhat higher than the COLA they are now getting for Social Security.