The consumer price index used for the calculation of the annual Social Security benefit cost-of-living adjustment, the CPI-W, rose 9.1% over the prior July period, according to the Bureau of Labor Statistics.
Calculated against the third-quarter CPI average for last year of 268.421, the Social Security cost-of-living adjustment for 2023 would be 8.86%.
It’s important to note that July is only the first of the three months that are used, every year, to calculate the annual Social Security cost of living adjustment. So we’re now “in the money,” using the first index number that will be used in the actual ost-of-living calculation. But two additional months will be needed to calculate the final cost-of-living adjustment.
If the index remained unchanged in both August and September, the annual Social Security adjustment for 2023 would be 8.86% (292.219/268.421).
If the index figures for August and September are higher or lower, the final ost-of-living adjustment figure will be higher or lower. Here’s an example. For the cost-of-living adjustment to be 10% — which some observers have thought possible — the index average for the quarter would have to be 295.263.
Earlier story: In May, I explained how to calculate the cost-of-living adjustment Social Security recipients can expect in January. For those of you who don’t want to do the math yourselves, here is my take on the inflation figures for May and what that might mean for the increase.
The consumer price index used to calculate the annual Social Security benefit cost-of-living adjustment came in at 292.542 for June.
Last year in the July/August/September quarter used for calculating the increase for the next year, the CPI-w was 268.421.
This means that the inflation since the last measuring period just reached 9% (292.542/268.421) - 1 = 8.986%.
If there is no inflation over the next three months — in other words, the CPI remains at 292.54 — the benefit increase for 2023 will be 9%. Index declines over this period are rare events, so the odds are that the increase for 2023 will be greater than 9%.