The latest July 2023 CPI-W numbers are in. What is the impact on the 2024 COLA?
Estimates are showing that the 2024 COLA may be around 2.75%.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is the most important index for measuring inflation. The CPI-W index is used to calculate the annual cost of living adjustment (COLA) for federal retirement and Social Security.
The annual COLA rate is calculated by comparing the average inflation rate for the third quarter of the year (July, August, and September). The US Department of Labor calculates the change in CPI from the third quarter average of the previous year to the third quarter average for the current year.
The CPI-W figure for July 2023 was 299.899. The index is now about 2.75% higher than the average CPI-W for the third quarter of 2022 which was at 291.901.
The following example illustrates the computation of calculating the percentage change in the CPI-W:
Are you a newly retired annuitant and wondering how your COLA is calculated in the first year? Check out our recent article on how to calculate your COLA: Newly Retired CSRS or FERS? Will You Receive a COLA?
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