The annual cost-of-living adjustment, or COLA, for Social Security benefits in 2022 — usually announced in October — could be 6.2%, the highest since 1983, based on Wednesday's Consumer Price Index announcement, according to Social Security and Medicare policy analyst Mary Johnson of The Senior Citizens League, which estimated the 2022 COLA would be 6.1% a month ago.
The latest estimate, which is based on July consumer price index data of 5.4%, is especially significant as next year's COLA will be calculated on the average of third quarter, or July, August and September, CPI data.
"Now with one third of the data needed to calculate the COLA already in, it increasingly appears that the COLA for 2022 will be the highest paid since 1983 when it was 7.4%," Johnson said in a release.
The consumer price index for all urban consumers in July rose 5.4% over the past 12 months, and 0.5% from the previous month, the Labor Department reported Wednesday. (The CPI includes food and energy.)
Economists polled by Bloomberg had forecasted a 0.5% month-over-month increase and a 5.3% increased compared to a year earlier.
Key components of the increase were energy prices, up 1.6% from the previous month (as gasoline prices rose 2.4%), and new vehicle prices, which increased 1.7% from previous month.
July's core CPI, which excludes food and energy, rose by 0.3% from June — its smallest increase in four months — and 4.3% from a year ago, according to the BLS. (In June, the core CPI was up 0.9% from May and 4.5% from a year earlier.)
