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.
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.