SSA 2013 Cola Watch – October Report (Updated Monthly)

We have now started 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.

The baseline level (my term for it,) which was the amount which determined the amount of the 2012 COLA was 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 October CPI-W

We’re not off to a good start.

According to the Department of Labor, Bureau of Labor Statistics (BLS) the CPI-W dropped 0.3% in October from what it was in September.

September, 2011 223.688

October, 2011 223.043 (-0.3)

Here it is in graph form.

CPI-W July 2011 Through October 2011

For the record, I don’t believe it either.

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.

A decline in the energy index more than offset small increases in the indexes for food and all items less food and energy to create the all items decline. The energy index turned down in October after increasing in each of the three previous months as the gasoline and household energy indexes declined after a series of seasonally adjusted increases. The food index rose in October, but posted its smallest increase of the year as the fruits and vegetables index declined sharply.

The index for all items less food and energy increased 0.1 percent in October; this was the same increase as last month and matches its smallest increase of the year. While the shelter and medical care indexes accelerated in October and the apparel index turned up, the indexes for new vehicles, used cars and trucks, airline fare, and recreation all declined.

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4 Responses to SSA 2013 Cola Watch – October Report (Updated Monthly)

  1. Mike says:

    I live in Florida and the cost of gas did drop conciderably in October. My guess is that it was to get rid of excess supply. Refineries are now doing Winter Gasoline required in many States…the cost of gas will start to go up again. It’s also the beginning of the Home Oil heating season…. Oil today was back trading over $100 a barrel….I think it was nearly $104.00….I think that will be offset somewhat by retail sales.
    Christmas shopping price wars are in full effect, so I don’t see any rise in the CPI till after the New Year.
    P.S….You’ve given me a new hobby…..playing with these numbers and the forces behind them !!

    • ssapotluck says:

      Mike

      Thanks for your comment.

      According to the AAA Fuel Gauge Survey, the national average for regular unleaded gasoline decreased from $3.65 to $3.43 in September. October was relatively flat, increasing from $3.42 to to $3.43 during the month. Floridians must have been lucky. November is showing a decrease, from $3.43 to $3.37, as of yesterday. And during this entire period, the price of crude oil is increasing. It is rather like reading tea leaves. I had forgotten about the switch from summer formulation to winter formulation — I no longer can drive — but that may be an explanation for why the gasoline cost does not reflect the crude oil cost.

      It is sort of like a hobby — trying to predict what the BLS will do — but it can be very frustrating. They also have a joker that they use called “seasonally adjusted” which allows them to change costs without explanation.

      Anyway, thank you for following our blog.

  2. Kentucky says:

    Thanks for the updates. You are a great inspiration for seniors.

    • ssapotluck says:

      Kentucky

      Here is something I hope you’ll find particularly inspiring. Despite all the noise emanating from the politicians in Washington, your Social Security is safe. You won’t see your COLAs based on C-CPI-U. And there will be no Medicare cuts directly affecting beneficiaries. The super committee will not succeed in their mandate. The Congress will spend the next year arguing over whose fault this is, but in the end they will cancel the $1.2 trillion in cuts long before they are scheduled to take place in 2013.

      The 112th Congress will go down as perhaps the worst since pre-Civil War days, Harry Truman had his “Do Nothing” Congress to kick around, which he did vigorously. Obama will have his “Do Worse Than Nothing” Congress. I hope he finds a good supply of gumption and commences kicking at every opportunity.

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