WHAT THE HECK IS THE CPI?

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Due to inflation (which measures the successive decrease in value of the dollar), Social Security payments receive cost-of-living adjustments. These are based on the consumer price index, known as the CPI. The index is a rough indication of the rise in price of goods over time, and thus is said to be a measure of inflation. (When money is worth less you need more of it to buy any given item.)  Currently, the government estimates inflation to be 1.8%.

            However, anyone who has gone to the grocery store recently knows that prices have increased much more than 2%. My own grocery bill is over 5% higher than last year. So, why the discrepancy?

            In its infinite wisdom, in the 70's, the government decided to exclude the cost of food and energy from the calculation of the CPI, on the grounds that the prices were too volatile and therefore misleading. Wrong. The price of food and energy were showing too clearly the true cost of inflation. In 2012, if you factor in food and energy in the CPI, inflation is about 7%. This effectively means that seniors are paying more for food and gas, but their monthly checks aren’t keeping up with this increase. This is crazy. Besides health care, food and gas are seniors greatest expenditures -- what they actually spend most of their money on. Yet, these very items are excluded from the cost-of-living adjustment. Don’t let the government recalculate the CPI. It is not going to favor seniors that’s for sure.