Monthly CPI updates in Veteran Finance & Tax Related Issues Forum

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Monthly CPI updates

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herdgrunt

#81

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Posts: 5898

Jun 20 12 12:15 PM

Yeah, I'm beginning to understand it better myself.

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LouF

#82

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Posts: 12981

Jul 11 12 9:38 AM

10,000 plus post...

Somebody posted that oil prices are going down and should affect COLA. The CPI-W does not include oil or gas or food. They are too volatile and would cause havoc to this average. Most companies that use commodities to produce products hedge their purchases to allow for a smoother increase in cost of goods

Lou SSG
Santa Fe NM
4/21 11LIB Americal
1/69-8/70
50% PTSD
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100% IU P&T

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Survivir

#83

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Posts: 10355

Jul 11 12 11:30 AM

LouF wrote:
Somebody posted that oil prices are going down and should affect COLA. The CPI-W does not include oil or gas or food. They are too volatile and would cause havoc to this average. Most companies that use commodities to produce products hedge their purchases to allow for a smoother increase in cost of goods

That is incorrect.

See this link http://www.bls.gov/cpi/cpid1205.pdf

Table 6

On Page #24...Food and Beverages

On Page #24...Transportation...Motor Fuels...Gasoline(All Types)

If you have another source...that states otherwise...I would be interested in seeing it.

Survivir

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Ruiz

#84

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Posts: 1481

Jul 11 12 11:44 AM

I AGREE 100% WITH SURVIVIR.FOR SURE IT DOES INCLUDED GAS PRICES

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Straps and Chains

#85

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Posts: 418

Jul 11 12 12:11 PM

I'm not sure why but this misinformation pops up on a fairly regular basis.

The information posted by Survivir is correct.

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LouF

#86

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Posts: 12981

Jul 11 12 7:55 PM

10,000 plus post...

Wash my mouth with soap, you are correct I just repeated what people have said here before. Social Security and VA are both based on the CPI-W which it appears historically a little less than the CPI-U and they both include transportation and food
. As I remember there was an attempt to change this to another index that did not include those items because some congressmen thought it would produce a lower COLA and it probably would since they have tended to rise faster than everything else

What is the difference between the CPI-U and the CPI-W?
The CPI-U is a more general index and seeks to track retail prices as they affect all urban consumers. It encompasses about 87 percent of the United States' population.

The CPI-W is a more specialized index and seeks to track retail prices as they affect urban hourly wage earners and clerical workers. It encompasses about 32 percent of the United States' population and is a subset of the CPI-U group.

The CPI-W places a slightly higher weight on food, apparel, transportation, and other goods and services. It places a slightly lower weight on housing, medical care, and recreation.

The CPI-W is utilized by the Social Security Administration to determine annual rates of increase. See http://www.bls.gov/bls/peoplebox11.htm.

Lou SSG
Santa Fe NM
4/21 11LIB Americal
1/69-8/70
50% PTSD
60% IHD
100% IU P&T

Edited 2 times by LouF Jul 11 12 8:01 PM.

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herdgrunt

#87

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Posts: 5898

Jul 11 12 10:52 PM

Lou, I think you're referring to some political efforts to change over to using the ''Chained CPI" which would produce a slightly lower COLA. Don't know now remember if the idea ever grew legs.

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mr G777

#88

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Posts: 5779

Jul 12 12 9:41 AM

Survivir wrote:

LouF wrote:
Somebody posted that oil prices are going down and should affect COLA. The CPI-W does not include oil or gas or food. They are too volatile and would cause havoc to this average. Most companies that use commodities to produce products hedge their purchases to allow for a smoother increase in cost of goods
That is incorrect.

See this link http://www.bls.gov/cpi/cpid1205.pdf

Table 6

On Page #24...Food and Beverages

On Page #24...Transportation...Motor Fuels...Gasoline(All Types)

If you have another source...that states otherwise...I would be interested in seeing it.

Survivir

this came up once before that gas is not included after alot of research,we concluded that it was in fact part of the CPI !!!

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herdgrunt

#89

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Posts: 5898

Jul 16 12 8:13 PM

So, when will last month's numbers be availiable?

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Survivir

#90

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Posts: 10355

Jul 17 12 12:14 AM

hutsky wrote:
If nothing changed in the economy from the end of May until Sep the COLA would be 1.5%. [226.600/223.233 = 1.0151; or +1.51%]. Since that number is already on the curve you can't jump off and start at some other point. So, the COLA will be whatever change occurs to this 1.5% over the next 4 months. There is one other factor that must be considered. The economy can only stand so much change over a short period without catastrophe. We are already within two months of the averaging CPI point that will determine the outcome (mid-June through mid-August). Therefore it is reasonable to expect a COLA somewhere around that number.

Below is a Table that confirms what Hutsky has said.

Note that ALL of the Months of the CPI-W Index is at the May 226.600.

As if the CPI-W Index STAYED the SAME all the way through September.

Also notice that the AVERAGE for the Months of July, August, and September is also 226.600.

And those would be the Months THAT COUNT.

So, as you can see...the LEAST Amount of a 2013 COLA Increase "would-be" 1.5%.

IF the CPI-W Index STAYED the SAME.

			"Potential"
MONTH	CPI-W INDEX	CPI-W 3-Month Avg	COLA Increase
March	226.304
April	227.012	226.639	1.526%
May	226.600

April	227.012
May	226.600	226.737	1.569%
June	226.600

May	226.600
June	226.600	226.600	1.508%
July	226.600

June	226.600
July	226.600	226.600	1.508%
August	226.600

July	226.600
August	226.600	226.600	1.508%
September	226.600

		2012AVG	226.600
		2011AVG	223.233
		Difference	3.367
		COLA Percentage	1.508%
		Rounded Off	1.5%

Of course, there is the possibility that the CPI-W Index "could" go Down.

But it would have to go...Way Down...Too Far Way Down..to go Below 1.5%.

The CPI-W Index for June will be released this Morning after 8:30AM.

I suspect that it will go DOWN from the May CPI-W Index...but NOT too much.

Here are ALL of the Months since the beginning...of January 1974.

The Months in BLUE are those Months that the CPI-W Index STAYED THE SAME...from the PRIOR Month.

The Months in RED are those Months that the CPI-W Index WENT DOWN from the PRIOR Month.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
1974	46.900	47.500	48.000	48.300	48.800	49.300	49.700	50.300	50.900	51.400	51.800	52.200
1975	52.400	52.800	53.000	53.200	53.500	53.900	54.500	54.700	54.900	55.300	55.600	55.800
1976	56.000	56.100	56.200	56.500	56.800	57.100	57.400	57.700	57.900	58.200	58.300	58.500
1977	58.900	59.500	59.800	60.300	60.600	61.000	61.300	61.500	61.800	61.900	62.200	62.500
1978	62.800	63.200	63.700	64.300	64.900	65.600	66.000	66.400	66.800	67.400	67.700	68.100
1979	68.700	69.500	70.300	71.100	71.900	72.800	73.700	74.400	75.100	75.700	76.400	77.200
1980	78.300	79.400	80.500	81.400	82.300	83.200	83.300	83.800	84.600	85.300	86.100	86.900
1981	87.500	88.500	89.000	89.600	90.300	91.100	92.200	92.800	93.700	93.900	94.100	94.400
1982	94.700	95.000	94.800	95.200	96.200	97.400	98.000	98.200	98.300	98.600	98.400	98.000
1983	98.100	98.100	98.400	99.000	99.500	99.800	100.100	100.500	101.000	101.200	101.200	101.200
1984	101.600	101.800	101.800	102.100	102.500	102.800	103.200	104.200	104.800	104.800	104.700	104.800
1985	104.900	105.400	105.900	106.300	106.700	107.000	107.100	107.300	107.600	107.900	108.300	108.600
1986	108.900	108.500	107.900	107.600	107.900	108.400	108.400	108.600	109.100	109.100	109.200	109.300
1987	110.000	110.500	111.000	111.600	111.900	112.400	112.700	113.300	113.800	114.100	114.300	114.200
1988	114.500	114.700	115.100	115.700	116.200	116.700	117.200	117.700	118.500	118.900	119.000	119.200
1989	119.700	120.200	120.800	121.800	122.500	122.800	123.200	123.200	123.600	124.200	124.400	124.600
1990	125.700	126.400	127.100	127.300	127.500	128.300	128.700	129.900	131.100	131.900	132.200	132.200
1991	132.800	132.800	133.000	133.300	133.800	134.100	134.300	134.600	135.200	135.400	135.800	135.900
1992	136.000	136.400	137.000	137.300	137.600	138.100	138.400	138.800	139.100	139.600	139.800	139.800
1993	140.300	140.700	141.100	141.600	141.900	142.000	142.100	142.400	142.600	143.300	143.400	143.300
1994	143.600	144.000	144.400	144.700	144.900	145.400	145.800	146.500	146.900	147.000	147.300	147.200
1995	147.800	148.300	148.700	149.300	149.600	149.900	149.900	150.200	150.600	151.000	150.900	150.900
1996	151.700	152.200	152.900	153.600	154.000	154.100	154.300	154.500	155.100	155.500	155.900	155.900
1997	156.300	156.800	157.000	157.200	157.200	157.400	157.500	157.800	158.300	158.500	158.500	158.200
1998	158.400	158.500	158.700	159.100	159.500	159.700	159.800	160.000	160.200	160.600	160.700	160.700
1999	161.000	161.100	161.400	162.700	162.800	162.800	163.300	163.800	164.700	165.000	165.100	165.100
2000	165.600	166.500	167.900	168.000	168.200	169.200	169.400	169.300	170.400	170.600	170.900	170.700
2001	171.700	172.400	172.600	173.500	174.400	174.600	173.800	173.800	174.800	174.000	173.700	172.900
2002	173.200	173.700	174.700	175.800	175.800	175.900	176.100	176.600	177.000	177.300	177.400	177.000
2003	177.700	179.200	180.300	179.800	179.400	179.600	179.600	180.300	181.000	180.700	180.200	179.900
2004	180.900	181.900	182.900	183.500	184.700	185.300	184.900	185.000	185.400	186.500	186.800	186.000
2005	186.300	187.300	188.600	190.200	190.000	190.100	191.000	192.100	195.000	195.200	193.400	192.500
2006	194.000	194.200	195.300	197.200	198.200	198.600	199.200	199.600	198.400	197.000	196.800	197.200
2007	197.559	198.544	200.612	202.130	203.661	203.906	203.700	203.199	203.889	204.338	205.891	205.777
2008	206.744	207.254	209.147	210.698	212.788	215.223	216.304	215.247	214.935	212.182	207.296	204.813
2009	205.700	206.708	207.218	207.925	208.774	210.972	210.526	211.156	211.322	211.549	212.003	211.703
2010	212.568	212.544	213.525	213.958	214.124	213.839	213.898	214.205	214.306	214.623	214.750	215.262
2011	216.400	217.535	220.024	221.743	222.954	222.522	222.686	223.326	223.688	223.043	222.813	222.166
2012	223.216	224.317	226.304	227.012	226.600	226.036	225.568	227.056

As you can see...the Two Prior Years...the CPI-W Index went DOWN in JUNE...from the PRIOR Month of May.

But in Both Years...the CPI-W Index went BACK UP and and Continued to GO UP Through September.

So it would be More Likely Than NOT...that the 2013 COLA will be "at least" 1.5%...and Probably Somewhat More.

Survivir

Edited 1 time by Survivir Oct 12 12 10:28 PM.

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vetforus

#91

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Posts: 3059

Jul 17 12 7:46 AM

Thanks Survivir, you were quick this morning. BTW I PM'd you twice in response to your msg. Didn't know if you got it. This was back when VBN was having issues.

You paid a price, you deserve to be compensated. Thank you for your Service.

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Straps and Chains

#92

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Posts: 418

Jul 17 12 8:02 AM

Went down to 226.036 in June, which still is meaningless.

None of these numbers mean a thing.

Next month we will start to see what will actually happen.

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mr G777

#93

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Posts: 5779

Jul 17 12 11:38 AM

my guess is the CPI it's gonna be flat this year !!!

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andyxoxo

#94

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Posts: 233

Jul 17 12 9:44 PM

Heading into the vital quarter that actually counts now (July, Aug, Sep) we are now only 1.3% ahead of the baseline figure (After the month of May we were 1.5% ahead so not sure how anyone can say that the CPI-W was flat during June because after June it went down .2%). So we are starting this final quarter only up 1.3%....

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hutsky

#95

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Posts: 2812

Jul 18 12 11:44 AM

Straps and Chains wrote:

Went down to 226.036 in June, which still is meaningless.

None of these numbers mean a thing.

Next month we will start to see what will actually happen.

Granted that the determining number is the average CPI-W for the next three months but 226.036 (the June CPI) is not meaningless. It froms the basis for the next three month's numbers and relates them to the benchmark number of 223.233.  Survivor's numbers show this relationship.

It is now a question of what the economy does to the current increase of about 1.3% (226.036 / 223.233) over the next three months that will determine the 2013 COLA.

I haven't read the SS law recently and cannot recall if there is a floor on the amount of increase that will be awarded but do know that increases of 1.3% and 1.4% have been approved in the past. One saving grace would be that Medicare Part B premiums cannot increase more than the COLA.

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Straps and Chains

#96

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Posts: 418

Jul 18 12 12:17 PM

Because of the economic volatility I personally don't subscribe to the idea that early months form any basis for what is to come. As Survivir says the numbers move up and down, sometimes rather erratically.

For instance, there are forecasts that meat prices will drop in the short-term because farmers and ranchers will be forced to sell off herds early as a result of the drought. The effect will lower the foodbasket prices for now and then these same prices will shoot up when the surplus of meat products has moved through the market. And the volatility of the energy market limits the ability to forecast, with any reliability, what energy will cost.

I see the monthly discussion as something for some to do and discuss. I suppose if it provides something to keep folks occupied it is fine.

If the increase in the CPI-W is at least one-tenth of one percent (0.1 percent), there will be a COLA. However, if the CPI-W increases by less than 0.05 percent, or if the CPI-W decreases, there will not be a COLA. That is what the current law provides for.

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Ruiz

#97

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Posts: 1481

Jul 18 12 1:07 PM

WELL WHO KNOWS GAS PRICES ARE INCREASING SINCE YESTERDAY.

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hutsky

#98

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Posts: 2812

Jul 18 12 6:46 PM

Each of the earlier month CIP numbers have an effect on the COLA. It is just the nature of the yardstick, the CIP. The behavior of each is inherently interwoven into the final outcome.

The prior, as well as the current, conditions should add some degree of confidence to anyone trying to realistically forecast an outcome. I do not have a crystal ball that shows me the exact numbers for the next three months but I do know some facts that will have a bearing on the outcome.

I Know:
   -  The current measure of the CPI supports a 1.3% COLA.
   - The average price level decreased by -0.2% over the past month.
   - Most of that decrease, as well as a comparable decrease in the May index, is attributed to fuel prices. These are down about 6% from May and about 12% from April.
   - Most other items that influence the CIP increased over this period.
   - In order to totally wipe out the current 1.3% indicated rate the prices for items defining the CPI would have to decline at a rate near three times the past month's decline every month for the next three months. (That is an annual deflation rate around 7%.)

Unless something else drastically drops, can we expect gas prices to continue a slide that is three times the drop over the past two months? I think not. We have the developing weather problems to deal with on food prices. Knowing these things I feel we will see a COLA somewhere around or above that current indicated 1.3%

Edited 1 time by hutsky Jul 18 12 6:48 PM.

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USNDW

#99

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Posts: 4378

Jul 18 12 11:54 PM

Meat prices may drop, but Corn is going to go through the roof. I remember not too long ago getting 5 ears of corn for $1. Some of you older farts 10 ears for $1. (I remember that too)
The other day in the store I saw 2 ears of corn $1`. I asked my wife if I was seeing the price right, took a lot of meds that day, and she said yes.

So, all the other grains and wheats are going to increase in demand and that means that will drive their prices up as well.
Milk, well, cows gotta eat to make milk. Cheese. I am shoot out of luck because I like dairy.

Overall I think the drought is going to have an impact in cost increases that will outweigh the drop in meat prices.

And I like Survivir's effort to keep us posted. Many of us don't have a whole lot more to do other than come here and get educated.

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Ruiz

#100

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Posts: 1481

Jul 19 12 10:46 AM

BUT DONT WORRY AFTER NOVEMBER 2012 HOPEFULLY EVERYTHING WILL GET BETTER

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