September’s Consumer Price Index

Consumers continued to experience higher prices in September according to the Bureau of Labor Statistics.  The Consumer Price Index (CPI) rose 0.6 percent for the month after an identical increase in August.  The core statistic, which removes food and energy because their price movements can be volatile, increased 0.1 percent for the third consecutive month.  Over the past year, the all items tally has increased by 2.0 percent, and the core CPI is up the same amount.

Energy continued to dominate the headline statistic in September.  After jumping 5.6 percent in August, it increased an additional 4.5 percent in September.   Most of energy’s surge came from the costs of the underlying commodities as energy services were only up a fraction of the amount by which materials increased.

Contrary to the concerns about food costs related to the weather, eating has not experienced much price pressure.  Over the last seven months, it has not had a monthly price increase of over 0.2 percent, and it only ticked up by 0.1 percent in September.  Food inflation has been up 1.6 percent over the last year, which is less than the total CPI increase of 2.0 percent in the same period.

This CPI report was particularly important to recipients of Social Security Benefits.  Since September is the final month of the third quarter, it is the month in which the cost-of-living –adjustment (COLA) is determined.  The Social Security Administration uses the difference between the average levels of a CPI sub-index in the two most recent third quarters to calculate the annual increase.  This year the COLA will be 1.7 percent and starts at the beginning of 2013.  The average Social Security recipient will see their benefit increase $21.00, going from $1240 to $1261 a month.  With over 56 million Americans getting a monthly check or deposit, that will amount to greater than $11 billion in additional payments.  Before you spend it though, reportedly the Medicare insurance premium is increasing by roughly the same amount.  Let’s hope we at least break even.   (by C. Cox)