September inflation rises, prompting larger Social Security cost-of-living adjustment
Compared with a year earlier, consumer prices rose 3.7% in September, with energy costs driving much of the increase. The Social Security Administration then announced a 3.6% benefit increase for next year, averaging about $75 more per month. Supporters say it helps seniors with rising costs, while critics argue it does not fully account for expenses like healthcare.
September's consumer price index increased 3.7% from a year earlier, faster than August, while monthly prices rose 0.6%. Energy was a major driver: heating oil costs climbed 74% over the year, and core inflation, excluding food and energy, reached 2.6%.
The Social Security Administration set next year's cost-of-living adjustment at 3.6%, based on July through September prices, adding roughly $75 monthly for the typical beneficiary. Average wages rose 3% in September, trailing inflation. Federal Reserve officials will consider the data at their next rate meeting.
The 3.6% COLA may help retirees and other beneficiaries absorb higher food, energy, and medical costs, though it could still lag for those with large healthcare expenses. Workers whose pay gains trail inflation may see reduced purchasing power, potentially affecting household budgets and spending. Fed rate decisions could influence borrowing costs for consumers and businesses.