We are now in a new fiscal year. Whether or not there is a COLA for January 2013 will depend on what happens this fiscal year, specifically in July through September, 2012
The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA, is 223.233. This was the average CPI-W for July through September 2011. We will need to exceed this amount in order to receive a COLA in 2013.
To remind everyone, the CPI-W (which stands for Consumer Price Index for Urban Wage Earners and Clerical Workers) represents the cost of “a basket of goods and services” during the month in question. The starting point for CPI-W for most items was 1982 through 1984, when the CPI-W was initialized at 100. So, in just under 30 years the cost of living has increased 223.2%
The November CPI-W
We are continuing our poor start.
According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W dropped 0.1% in November from what it was in October. To remind everyone, the October CPI-W dropped from September.
September, 2011 223.688
October, 2011 223.043 (-0.3)
November, 2011 222.813 (-0.1)
Here it is in graph form.
For a 1% COLA, the July 2012 through September 2012 CPI-W average would have to be 225.465.
For a 2% COLA, the July 2012 through September 2012 CPI-W average would have to be 227.698.
These amounts, along with the baseline amount, are shown on the graph.
Causes for the Decrease, According to the BLS
Note: These remarks refer to the CPI-U, which is the index for all urban consumers. It includes about 86% of the population. The CPI-W is a subset of the CPI-U. It contains only about 37% of the population, and is widely considered to be less representative of the expenses of Social Security beneficiaries.
The energy index declined for the second month in a row and offset increases in the indexes for food and all items less food and energy. As in October, the gasoline index fell sharply and the index for household energy declined as well. The food index rose slightly in November, though the index for food at home declined as four of the six major grocery store food group indexes fell.
The index for all items less food and energy increased 0.2 percent in November following increases of 0.1 percent in each of the prior two months. The indexes for shelter, medical care, apparel, and personal care all rose. These increases more than offset declines in the indexes for new vehicles and used cars and trucks.
For more information, please refer to Consumer Price Index Summary.