The consumer price index data for April, which was released on Wednesday, indicates that prices have increased by 8.3% over the past 12 months and by 0.3% from March to April. This decrease from the previous month indicates a moderate moderation in inflation.
The Senior Citizens League estimates that the Social Security cost-of-living adjustment (COLA) for 2023 could be 8.6 percent based on these data. Since 1981, this would be the largest COLA.
Mary Johnson, the league’s Social Security and Medicare policy analyst, bases her monthly COLA estimates on changes in the CPI-W, also known as the Consumer Price Index for Urban Wage Earners and Clerical Workers. In March, the league projected an 8.9% COLA for 2023.
The Social Security Administration calculates the benefit adjustment for the following year based on the third-quarter average CPI-W inflation rate. In 2022, the CPI was 5.9 percent.
The most significant price increases occurred in housing, food, airline tickets, and new vehicles. The price of gasoline decreased by 6.1% in April but increased by 43.6% over the previous 12 months. The monthly decline offsets the increases in natural gas and electricity indexes, according to the U.S. Bureau of Labor Statistics. The food index increased by 0.9%, the shelter index by 0.5%, and the index for new vehicles by 1.1%.
The index excluding food and energy increased by 0.6% in April, following a 0.3% increase in March. The 12-month change in the items less food and energy index was 6.2%, compared to 6.5% in March.
In addition to shelter, airfare, and new vehicles, the Bureau of Labor Statistics discovered that the largest contributors to the overall increase were medical care, recreation, and household furnishings and operations.
The latest estimate for the 2023 Social Security cost-of-living adjustment (COLA) is 8.6 percent; in April, inflation moderates slightly.
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Impact on Seniors
According to a new study by The Senior Citizens League, this year’s inflation spike has contributed to a 40 percent decline in the purchasing power of Social Security benefits since 2000.
“This is the greatest loss in purchasing power since [TSCL] began this study in 2010,” Johnson said in a statement.
The study compared the growth of Social Security COLAs to the price increases of 37 goods and services that retirees typically purchase. It focused on the expenditures of individuals aged 65 and older and compared the price growth of these goods and services to the annual COLA.
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According to the advocacy group, “while prices rose in almost every spending category, benefits were most affected by sharp increases in energy costs for home heating, gasoline, and food prices, as well as a steep 14.5 percent increase in Medicare Part B premiums in January of this year.”
In addition, the study determined that “since 2000, COLAs have increased Social Security benefits by a total of 64 percent, whereas typical senior expenses will have increased by more than double that rate by March 2022”
Highest rising expenses
In addition, the study found that the top five costs increasing the most rapidly for older Americans since 2000 were:
- Domestic Heating: +348%
- Prescription drugs and out-of-pocket expenses: +285%
- Medicare Part B premium increase of 274%
- All grades of gasoline: +231%
- Propane gas: an increase of 231%