Social Security recipients to get cost of living increase
Jeremy Hobson: Well in about a half hour, we’ll find out how much prices have been going up for consumers.
And as Marketplace’s Mitchell Hartman reports, the consumer price index is most important to senior citizens.
Mitchell Hartman: Retail prices probably rose about 3.5 percent over the past year. That’ll translate into a Cost-of-Living-Adjustment — or COLA — for Social Security recipients. It’s the first time since 2009 payments will rise. Until recently, inflation has been tepid.
But MIT economist Jim Poterba says for many consumers it now feels like inflation’s on a tear.
Jim Poterba: Some very visible prices have increased substantially through August, gas prices were up nearly 30 percent and food that you buy at the grocery store is up about 6 percent.
Poterba says the COLA adjustment will be a small shot in the arm for the economy.
Poterba: This kind of a COLA increase will basically help to keep the recipients of Social Security and other transfers in a basically similar purchasing power place. That will in fact cost the federal government in real dollars, but will also help to sustain demand.
The average Social Security payment in 2012 is expected to rise by $38 dollars a month, or about $455 a year.
I’m Mitchell Hartman for Marketplace.
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