There is a meme circulating around Facebook right now about Democrats voting against the 2.8% Cost of living increase. Normally, here at inflationData we try to avoid politics unless it directly relates to inflation, or our other major topics covered. But in this case I feel compelled to address this issue. The quick answer is that this is "NOT TRUE". However, if the MEME was phrased slightly differently it would be "TECHNICALLY TRUE". If the Meme said, "NONE of the Democrats voted FOR the Social Security Cost of Living Increase" it would be "TECHNICALLY TRUE". Likewise, if it said "NONE of the Republicans voted FOR the Social Security Cost of Living Increase" it would also … [Read more...]
How Does Inflation Affect You?
When people go the the grocery store and see ever higher prices they know how inflation affects them. But when they are feeling more philosophical they might reason that if all wages and prices increased at the same rate it would all balance out in the end right? Well theoretically yes but in reality it never works that way. Prices of various items all increase at different rates so some people are benefiting while others suffer. Those on fixed incomes suffer the most because the cost of things they are buying increases but their income stays the same. This is where COLA or "Cost Of Living Allowance" comes in it is an adjustment that is made to compensate for the increase in prices due … [Read more...]
Does the Consumer Price Index (CPI) Include Taxes?
Question: I have heard over the years that the CPI does not include taxes as one of its components. In other words, an increase or decrease in a tax rate is not considered a change in consumer prices/costs. Is this true? If so, how is this omission justified? Thank you, James Schmidt … [Read more...]
How to Calculate the Social Security Cost of Living Adjustment
How Does The Government Calculate the Cost of Living Adjustment (COLA) on your retirement benefits like Social Security? I recently received the following question from Jerry: What formula does the government uses to figure out COLA based on inflation for retired people each year? That is a great question! Social Security benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power due to inflation. The government uses a complex averaging system to take the average CPI index for the 3rd quarter of the previous year versus the average CPI index for the current year and calculate the inflation rate based on that. Cost of Living adjustments are … [Read more...]
