Social Security update: COLA forecast for 2024 shrinks to under 3% in latest prediction
Misty Severi
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The latest forecast for the Social Security Administration’s annual cost of living adjustment, or COLA, has put the 2024 projection at less than 3% based on the May 2023 consumer price index report, released Tuesday.
The COLA increase, which is based on the consumer price index for urban wage earners and clerical workers, could be just 2.7% next year, according to the Senior Citizens League. In comparison, the COLA last year was an 8.7% increase.
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The CPI-W for May 2023 rose 3.6% year over year, marking the lowest reading since March 2021, when it was 3.0%.
“The average monthly rate of inflation continues to trend downward and has almost reached the historical ‘average’ rate of change,” the Senior Citizens League said in a news release on Tuesday.
Despite declining inflation, an ongoing survey by the league found that seniors are reporting little change in their household spending.
“While the rate of inflation has slowed, prices have remained high in certain essential categories of spending,” the news release said. “Sixty-two percent of survey participants report food costs as their fastest-growing cost. Housing costs are the biggest concern of 22% of survey respondents.”
The more broad CPI report for May that was published by the Bureau of Labor Statistics on Tuesday saw annual inflation drop to 4%, down nearly an entire point from the 4.9% rate posted in April.
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The new estimate is a .4% drop from May’s forecast, which predicted the adjustment would be a 3.1% increase in 2024. The new number would mark the lowest COLA in three years since the adjustment was a 1.3% increase in 2021. The COLA in 2022 was a 5.9% increase.
The SSA’s announcement of next year’s COLA will come in October, so the estimate is still likely to change. The final determination is based on the average inflation rate and CPI-W of the months in the year’s third quarter: July, August, and September.