Chart of the Week – Inflation & Social Security

Friday, March 10, 2017 | Leave a comment

A few months ago, it was announced that social security payments would increase by 0.3% in 2017.  Many were expecting a greater amount, as retirees have felt cost of living increases.  However, due to the way cost of living adjustments are calculated, the increase was less than expected.  To many, if felt like a letdown.

Since early 2015, inflation (CPI-W) has been creeping upward, currently at 2.5% as of January this year–the highest since April 2012.  While this is no reason to cause alarm, it supports the expectation that the Federal Reserve will continue to increase interest rates in 2017.  This can be good news for savers and retirees that rely very heavily on yield for income.

A silver lining for retirees is the recent favorable inflation measurements for food.   While prices of goods and services have generally been on the rise, from April 2015 to today, food has seen a decline in the rate of inflation over the same period.  As of January of this year, a basket of food cost -0.2% less than it did the year before.

Thanks for reading.

Nick