2023 Social Security COLA: Predictions based on July CPI report
The 2023 COLA will be calculating using the CPI data from July, August and September. What do last months inflation numbers tell us about this year’s COLA?
On Wednesday, the Bureau of Labor Statistics reported that prices held steady in July, leading to an 8.5 percent year-over-year increase.
In October, the Social Security Administration will announce the Cost-of-living-adjustment (COLA) that will be applied to benefits starting in January 2023. This year beneficiaries are set to receive a historic increase after a wave of inflationary pressure took hold throughout the market.
Since last October, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has shot up from 271.552 to 292.219. The CPI-W is a more specific price index that is used by the SSA to calculate the COLA each year. Last year the SSA calculated a COLA of 5.9 percent and, in all likelihood, this year’s will be higher.
What do the July figures tell us about the 2023 COLA?
Based on the CPI increases tracked in July, if the COLA were offered solely based on this data, beneficiaries would receive a 7.18 percent increase. However, prices are likely to begin to fall in August and September, meaning that the COLA is likely to be lower than the seven percent figure.
Already, the CPI-W is tracking a decrease in prices, with the index dropping slightly from 292.542 seen in June. Fuel costs are coming down, which is easing inflation across sectors and industries.
The issue with using a three-month screenshot to determine the COLA is that it may not represent the financial stress households have been under throughout this inflation crisis. This is exemplified by the fact that the COLA could decrease from what would be offered based on last month’s data. Seniors, many of whom receive their full income from their Social Security, have struggled to keep up with the rapid increases in prices. The Senior Citizens League (SCL) has received reports that many on social security are skipping meals and rationing their medication because they cannot afford to groceries or their prescription drugs. The government has categorically failed to relieve stress for seniors across the country.
Historic cuts into the purchasing power of seniors
The Senior Citizens League reported in May on a long-term study they have been conducting that found that “high inflation has caused Social Security benefits to losing 40 percent of their buying power since the year 2000.”
“That’s the deepest loss in buying power since the beginning of this study by The Senior Citizens League in 2010,” says Mary Johnson, a Social Security policy analyst for The Senior Citizens League who conducted the research.