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Friday 11 August 2023

The Daily Money: Social Security COLA likely to stay the same despite inflation uptick

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Projections for the next Social Security cost of living increase remains the same despite inflation rising slightly in July.

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The Daily Money

ALL THE MONEY NEWS YOU NEED TO KNOW

Fri Aug 11 2023
 

Charisse Jones |  Economic Opportunity Reporter

Whew! We made it to Friday. It's Charisse Jones with the Daily Money headlines to keep you in the know through the weekend.

Projections for the next Social Security cost of living increase remained at 3%  despite inflation rising in July for the first time in a year.

That's according to The Senior Citizens League, a nonprofit seniors group that provides COLA forecasts. The current projection for 2024 is far below the 8.7% COLA in 2023,  which was the highest in four decades, and the same as  last month's estimate for what's coming next year.  

Inflation ticked up slightly in July, bringing to an end a 12-month streak of waning consumer price increases and highlighting how getting to the Federal Reserve's desired target may take a while longer. Consumer prices overall rose 3.2% as compared to a year earlier - a bigger increase than the 3% uptick seen in June, according to the Labor Department's consumer price index, which is a broad gauge of how much goods and services cost.

COLAs haven't sufficiently kept up with inflation though they are intended to to help Social Security recipients weather price hikes. Older Americans were the only segment of the population whose share of poverty rose between 2020 and 2021, according to the Census Bureau.    

Instacart to accept SNAP benefits nationwide

Instacart is now the first grocery marketplace service to accept food stamps nationwide.

The service said Thursday that those who are part of the Supplemental Nutrition Assistance Program, or SNAP, will be able to use those benefits to buy groceries online throughout the U.S.

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Volunteers with King's Cathedral Maui unload a donation of clothing on Aug. 10, 2023, in Kahului, Hawaii. Dozens of people were killed and thousands displaced after a wind-driven wildfire devastated the town of Lahaina on Tuesday. King's Cathedral Maui is providing food and shelter for displaced families.

Justin Sullivan, Getty Images

"Our mission is to create a world where everyone has access to the food they love,'' Dani Dudeck, chief corporate affairs officer at Instacart, said in a press release. "By expanding online SNAP acceptance to all 50 states, we're delivering on our mission by modernizing access and connecting more communities to affordable and nutritious foods."

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McDonald's customers can cool down with a McFlurry for a little while this summer.

The fast food giant began selling its Peanut Butter Crunch McFlurry  on Wednesday at some locations across the country. The sweet treat, made with vanilla soft serve, cereal mix and bites of peanut butter chocolate cookies is available while supplies last.

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Each weekday, The Daily Money delivers the best consumer news from USA TODAY. We break down financial news and provide the TLDR version: how decisions by the Federal Reserve, government and companies impact you.
Concerns about inflation have increased in recent months, as stimulus payments from the federal government increased the ability of consumers to spend more than they had since well before the COVID-19-driven recession. This was compounded by difficulties low-paying industries had attracting workers, which made them raise the wages of hundreds of thousands of workers. But just as the pandemic caused prices of some items to soar, it caused prices of other items to plunge. The price of "food at employee sites and schools" fell the most, most likely because many people are now working from home and schools are not at full capacity yet. On the flip side, the price of this household item is soaring . Consumer spending is not the only reason inflation fear has been rekindled for the first time since before The Great Recession. Fuel prices have risen over the course of the year, with a sharp increase in the price of oil. Housing prices have risen at an unprecedented pace, to some extent because of low mortgage rates. Can the government use traditional measures to keep down the prices of many items that make up the consumer price index, even after their recent increase? The Federal Reserve has set interest rates relatively low since the Great Recession to help stimulate the economy. But with the recent COVID-19 recession and inflation creeping up, the Fed may be running out of ways to influence rising prices. If the Fed raises rates to combat inflation, for example, it could put a damper on the already pandemic-stricken economy. Once a month, the Bureau of Labor Statistics provides the consumer price index, the most carefully followed set of data about monthly prices movement. The numbers are broken into dozens of individual categories. The most recent release was for August . Figures are compared to the immediately previous month and to the same month a year ago. In August, the CPI for Urban Consumers rose by 5.3% from the same month last year. The price of some items rose by double digits. Among them "beef and veal" rose 12.2%, fuel oil rose 28.6%, women's clothing jumped 11.9%, and used car prices rose 31.9%. The price of education has also been increasing, and not just during the pandemic. This is the cost of college the year you were born . Even as inflation has become a part of the economic landscape this year, the prices of some items fell in August, and several fell very sharply. A review of the list indicates that price decreases have been partially due to the pandemic. Food at employee sites and schools fell 42.5%. This may be due to a drop in students' attendance because of the virus and summer vacation. Food prices at employee sites were likely affected because of the working-from-home mandate in most companies. The price of telephone hardware and calculators, both often used in offices, dropped 15%. The price of sewing machines and fabric fell 10.8%.

While July's numbers ended a 12-month streak of slowing consumer price increases, inflation is far off the historic levels of June 2022.

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The recently released May inflation numbers were extremely high -- again. Month after month, government officials, businesses, and individuals hope the upward pressure on prices -- of items such as cars, housing, food, and fuel -- will begin to taper off. In May, the situation got worse. The consumer price index rose 8.6% from the same month a year ago. It was the sharpest rise since December 1981, with fuel oil prices soaring. CPI figures have been regularly tied to several factors. One is supply chains, and mostly driven by the pandemic, key items like computer chips have been on backorder for months. Among the products that require millions of these are cars. Auto inventories have collapsed, pushing up prices. ( This is the most overpriced used car in America .) CPI has also been tied to oil prices. In large part because of the embargo on Russian oil due to its invasion of Ukraine, global supply of oil has tightened considerably. This, in turn, has affected the prices of a range of products from gas, to home oil, to jet fuel. Food costs can also impact consumer prices. Some food prices will eventually be affected by the lack of grain exported from Ukraine. For the time being, other large producers of meats and grains have not been able to keep pace with global demand. Another major factor affecting prices is interest rates. The Federal Reserve has started to raise them aggressively to bring down inflation. However, this has also caused a rise in mortgage rates, which also affects the cost of housing, whether by ownership or rent. Several economists have described the Federal Reserve as flat footed. Former Treasury Secretary and Harvard University President Larry Summers, for example, remarks regularly that if the Fed had started to raise rates last year, inflation would not have gotten out of hand. Inflation, it now seems almost certain, will trigger a recession early next year. As products and services rise in price, the effects on consumer spending and corporate margins will be considerable. To determine the household items that are soaring in price, 24/7 Wall St. reviewed the Bureau of Labor Statistics' Consumer Price Index Summary May report. Prices are compared to May 2021. In May, the cost of fuel contributed substantially to the overall increase in prices. Fuel oil was up over 100% from the same month last year. Gas prices, depending on the blend, were up 40% to almost 50%. The price of some food items also rose quickly. Eggs prices were higher by 32%, while the price of some chicken products jumped almost 20%. ( This is the price of bacon and eggs the year you were born .) The news about the May CPI was awful. Perhaps worse is that the rise is not expected to end soon.
 

Inflation picks up to 3.2% annually in July.

The CPI report shows annual inflation rose slightly in July, interrupting a year-long streak of waning price hikes. Core price hikes stayed elevated.
Image source: Getty Images. It's hard to imagine what retirement would look like for our country without Social Security. The program lifts millions of senior citizens out of what would be an impoverished existence. At the same time, overall benefits are modest. The average retired worker gets an annual benefit of $16,200 -- hardly enough to replace the income many have become accustomed to living on. But there are five smart ways that you can boost your Social Security benefits...if you start acting now. 1) Wait to claim This is the simplest and most well-known way to boost benefit checks. The full retirement age is currently 66. If you claim at that age, you get your full benefit, which you can calculate here . But you can actually start receiving benefits as early as 62, or as late as 70. If your full monthly benefit at 66 would have been $1,000, here's how it would change based on when you claim.
 

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