While growing inflation was indicated just four months ago, that "dragon" has vaporized with today's announcement that the 2015 cost of living adjustment (COLA) for Social Security recipients and others will be 1.7 percent, the fifth time in six years that the COLA was under 2 percent, notes Grumpy Editor.
Some seniors faced with higher costs in vital areas such as health care, utilities, car insurance, groceries and airline travel are raising eyebrows over the Bureau of Labor Statistics tally.
The 2015 COLA compares with increases of 1.5 percent for 2014, 1.7 percent for 2013 and 3.6 percent in 2012 following two years with no raises.
The BLS averages consumer price indexes from July, August and September to determine next year’s COLA for about 60 million Social Security and Supplemental Security Income recipients.
As recently as May there were indications of higher inflation. That's when the BLS announced year-over-year gain in the consumer price index for the 12 months ended in April jumped to 2 percent.
A June 13 headline in The Wall Street Journal read: Inflation "Dragon" Shows Signs of Stirring. Two days later, Associated Press reported “evidence that inflation is ticking up from low levels.”
After the BLS released figures on June 17 that showed the CPI rose 2.1 percent over the prior 12 months, media reported indications point to “a burst of higher inflation.”
That’s when John Ryding, chief economist at RDQ Economics LLC, said, “we’ve got an inflation rate that’s been rising more than the Fed expected."
Those June reports came as an early indicator that Social Security recipients might get an improved COLA boost for 2015. But, as with the weather, clouds suddenly began to appear on the horizon.
In July, the BLS said consumer prices rose 1.6 percent from a year earlier --- down from 2.1 percent it reported just a month earlier.
Then in late August word was put out that most signs point to “benign inflation pressures.”
Going into September, media resurrected use of the long-used "tame" in referring to inflation. At month's end, Federal Reserve Bank of Chicago President Charles Evans said inflation was "stubbornly low."
Inflation took a back seat last week when the "risk of deflation" phrase made a reappearance with reports of slowing global economic growth.