Inflation break out in 2022: predicting 2023 COLA?

The current inflation will not be “temporary,” as published some months ago, but rather a way of lessening anxiety among Americans. In 2022, inflation is rising drastically. It will likely affect the 2023 COLA federal retirees estimates and Social Security beneficiaries.

The index obtained in March revealed that the (CPI-U) added 1.2 % in March after increasing 0.8 % in February. The “total items index” has increased 8.5% in the last 12 months. The spikes in inflation are presumably higher than the 8.4% inflation rate of 1982. This is due to the change in the measure of the inflation rate over the years.

How 2022 inflation will affect your Cost-of-Living Adjustment (COLA) in 2023

The Bureau of Labor Statistics obtained the COLA  figures, which have increased to 9.4% over the last 12 months.

How to know the percentage increase in COLA for the following year

The Consumer Price Index (CPI) for urban wages surveys are taken from the third quarter (July September) of the current year (2022) compared to the Consumer Price Index for the third quarter (July-September) of the previous year (2021).

The average figures from the current year are compared to those from previous years  (2021). The figure from the average comparison is rounded up to the nearest 0.1%. That will be the COLA percentage increase you will receive in 2023.

For example, the average figure for CPI for the third quarter of 2022 is 342.780, and the CPI for the third quarter of 2021 is 306.429. Then the COLA percentage amount for 2023 will be: 

 (342.780-306.429) ÷ 306.429 ×100 = 11.9% 

Due to the present trends, there will be a relative increase of about 8.6% COLA in 2023 for you as a retiree or disabled person on the Social Security insurance plan. As a federal employee approaching retirement, you should be conversant with the COLA calculation and how to use the increase of the COLA positively.

The recorded rate of inflation versus reality

Inflation might get worse over the next year. The inflation measuring theory materialized in the 1980s and 1990s. The CPI was assumed by measuring the price changes in fixed-weight baskets of commodities. You can spend less on items like groceries, foodstuffs, and other items with substitutes or be left out to save and maintain a constant basic meaning of living. To retain the exact cost of living, you should be able to consume the goods in the same quantity without trading off the price and the quality.

Substantial inflation has a political impact. It can lead to a lost or won election based on the inflation rate.

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