# Consumer Price Index



## HarryH (May 12, 2017)

The latest CPI report https://www.bls.gov/news.release/cpi.htm was released this morning. You can read the information in the link.

The important information (as far as I am concerned) is way at the bottom. While the report is all about CPI-U, the CPI-W is the basis for C.O.L.A. It stands at 238.432. Even that is not a factor in determining the C.O.L.A. as it is outside the period that is used. The period required is 4Q FY average compared to previous year's 4Q FY average. Last year's 4Q FY average was 235.064. 

Of course, as we saw last year, any increase will likely go to Medicare.


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## OneEyedDiva (May 22, 2017)

They need to find a better system to base our COLAs on. The last increase was a joke because as you pointed out it was eaten up by the increase in Medicare premiums. The current system is unrealistic for seniors. We are seeing food prices, drug prices and general medical care costs rise much more then the CPI they use reflects.


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## HarryH (May 22, 2017)

OneEyedDiva said:


> They need to find a better system to base our COLAs on. The last increase was a joke because as you pointed out it was eaten up by the increase in Medicare premiums. The current system is unrealistic for seniors. We are seeing food prices, drug prices and general medical care costs rise much more then the CPI they use reflects.



Yes, the current system is unrealistic for seniors, but be very wary of changes. The current system of using the CPI-W versus CPI-U goes back to laws passed in the late 70s. At one point the BLS tinkered with the idea (1990s) of one more applicable to seniors, the CPI-E:  https://www.bls.gov/news.release/cpi.br12396.a06.htm 

It indicated a higher rise in inflation for seniors, which brought more effort and studies forward regarding CPI-E. https://www.bls.gov/opub/ted/2012/ted_20120302.htm

There is nothing since that last report. Budgetary issues have largely squelched any further studies away from CPI-W. It should be noted that bi-partisan studies have gone outside the BLS structure to the BEA's PCE method. Which runs behind all that BLS offers up. 

I am not sure about next year's cola, nor the medicare premiums. While the "no harm" clause protects the dollar value of S.S., it also drives increased Medicare spending upon the newer enrollees, etc. Almost by default, any anticipated S.S. increases will be taken for medicare, imo. How many years this will occur... is anyone's guess at this point. Relief is not likely, as this situation is a result of laws passed when the Dems held the WH and both houses of congress. I really do not see a situation where republicans would reverse. 

Continuation of the current system will likely see net income between S.S. payments and Medicare deductions to slip faster and entice S.S. recipients to S.S.I. That might seem the best option, but individuals should be made fully aware of the potential pitfalls already known... and possible future issues, imo.

Notes:
BLS-Bureau of Labor Statistics, which is within the Department of Labor
BEA-Bureau of Economic Analysis, which is within the Department of Commerce


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## OneEyedDiva (May 23, 2017)

"Continuation of the current system will likely see net income between S.S. payments and Medicare deductions to slip faster and entice S.S. recipients to S.S.I." 
Harry individuals have to meet certain criteria to qualify for S.S.I so how would feasible would that "enticing" be for those who do not meet the  criteria?


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## HarryH (May 23, 2017)

OneEyedDiva said:


> "Continuation of the current system will likely see net income between S.S. payments and Medicare deductions to slip faster and entice S.S. recipients to S.S.I."
> Harry individuals have to meet certain criteria to qualify for S.S.I so how would feasible would that "enticing" be for those who do not meet the  criteria?



S.S.A. gives the option and lays out the rules for SSI. It's all the programs that come along with SSI that MUST be fully understood and largely aren't . People grasp the SSI rules and may entice themselves to adjust to SSI rules, but fail to comprehend those other programs and their long term impact.


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## Don M. (May 23, 2017)

The entire SS system is headed for trouble if Washington doesn't face reality.  Starting in 2020, just 3 years from now, SS will begin paying out more in benefits than it receives in payments.  Within 15 years, after that, the SS Trust Fund will be exhausted, and the program will be faced with having to make drastic cuts.  There are solutions, which could be taken now, that would prevent most of SS's future troubles, but our Congress seems unwilling to work on problems before they become a crisis.


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## mathjak107 (May 24, 2017)

the cpi's are not personal cost of living index's .they simply price change index's on a basket of goods and services through out the 1500 mini economies that make up this country .

it may have little in common with a real cost of living index which depends on what you buy , how many times you personally buy it and the quality of what you buy .

better quality goods tend to see higher price increases but may last many times longer than cheaper versions .

seniors also tend to have their spending patterns change as they age and spending generally reduces on many things .

spending studies have shown that what seniors no longer buy or do as they age helps defray the costs on what went up on the things they continue to spend on .

so someone raising a family has a totally different effect from these price changes .

our biggest costs are usually housing and energy .  my neighbor has no car and lives in a rent stabilized building , the last 2 years 1/2 of all housing in nyc for millions has seen no rent increases . her personal cost of living is far different than yours  . thinking the cpi is supposed to track your personal cost of living is a fallacy.

ss was not only never designed to track someone's personal cost of living but it was never designed to be a sole means of support either .


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## Camper6 (May 25, 2017)

In Canada the CPI is used to determine an increase in your government pensions.

It's not great.  But it's better than nothing.


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## mathjak107 (May 25, 2017)

no cpi can ever match someones cost of living ,  just based on the fact homeowners can be effected way less by future inflation than renters


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## HarryH (May 25, 2017)

mathjak107 said:


> no cpi can ever match someones cost of living ,  just based on the fact homeowners can be effected way less by future inflation than renters



True, but most people think it should. The methodology provides a framework for each individual to develop their own personal CPI. Of course, this provides the opportunity to understand what is being spent... where. My inflation is 0.86% y/y compared to CPI-U's 2.2% y/y.


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## mathjak107 (May 25, 2017)

everyone things it should , but it can't and never will . we are 1500 mini economies and most see things very different from each other


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## HarryH (May 25, 2017)

mathjak107 said:


> everyone things it should , but it can't and never will . we are 1500 mini economies and most see things very different from each other



Which is why it is possible to burrow into the BLS data and find regional and city data relevant to your area. Laws require a composite be used for a variety of things from C.O.L.A. to poverty levels. No national publication will use one region, but national numbers. The Census Bureau publishes poverty levels nationwide which get reported, but also publishes poverty levels based on cost of living across the nation... which are not reported. Yet the latter shows some significant swings.


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## mathjak107 (May 25, 2017)

our own personal spending patterns determine our personal rate of inflation .

how many times we buy a product , the price change on the product , the quality level of the product and our ability and willingness to avoid products and sub  are what determines a cost of living . not just measuring a price change on goods and services we may not use much of .


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