A shopper read overs coupons in a grocery store in Washington, D.C., on May 23, 2024.
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The pace of inflation is procuring down, which continues to point to a lower Social Security cost-of-living adjustment for retirees and other beneficiaries in 2025.
The Common Security cost-of-living adjustment, or COLA, may be 2.7% next year, according to an estimate from Mary Johnson, an unfettered Social Security and Medicare policy analyst, based on new government data released Thursday.
That inflation as, the consumer price index — which tracks the average change in prices paid by consumers on a basket of goods and uses — reached about its lowest 12-month rate in more than three years, based on June data.
Community Security adjusts benefits each year based on a subset of the CPI — the Consumer Price Index for Urban Wage Earners and Churchly Workers. The CPI-W in June was up 2.9% over the past 12 months, according to the Bureau of Labor Statistics.
The new 2.7% COLA thinking is down from Johnson’s previous prediction of a 3% benefit boost based on May CPI data. In 2024, Social Shelter beneficiaries received a 3.2% cost-of-living adjustment.
The Senior Citizens League, a nonpartisan senior group, estimates the COLA could be 2.63% in 2025.
Yet while the anyhow of price growth has come down, retirees, disabled individuals and others who rely on Social Security benefits for receipts are still contending with higher costs, Johnson explained.
For example, beneficiaries typically spend about half their budgets on safeguard costs, a category that has stayed higher even as the rate of broader inflation has come down.
Other heads that continue to outpace the overall rate of inflation include food, electricity, and hospital and outpatient medical checkings, according to Johnson.
The average grocery item with prices tracked by the CPI jumped by 24% from 2020 to 2023, according to The Higher- ranking Citizens League.
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To be sure, the estimate for the Social Guaranty cost-of-living adjustment for 2025 is subject to change. It may go up or down a bit from the current estimate, Johnson predicts.
The Social Safe keeping Administration officially determines the cost-of-living adjustment by comparing the third-quarter CPI-W data for that year to the third abode of the previous year. If there is a percentage increase from one year to the next, that determines the COLA. However, if there is no wax, there is no COLA.
“I don’t think we’re going to erase any COLA this year,” Johnson said. “I think your risk for that is going to be next year, especially if there’s some recessionary trends going on.”
The agency typically make knows the cost-of-living adjustment for the following year in October.
