For social security recipients, 2.5 percent bump As part of the 2025 Cost of Living Adjustment (COLA).
The increase announced Thursday was the smallest in years and was in line with experts' expectations as inflation appears to be easing to some extent. Millions of recipients saw the biggest increase in benefits last year, at 8.7%, as inflation hit its highest in decades during the pandemic.
Social Security Commissioner Martin O'Malley said on Thursday the increase would “help tens of millions of people make ends meet even as inflation begins to subside”.
As a result of this increase, approximately 70 million beneficiaries will receive a 2.5% adjustment starting in January next year, authorities announced. The agency also said increased payments would begin on December 31 for more than 7.5 million people receiving Supplemental Security Income (SSI) payments, noting that “some people receive both.”
The latest inflation statistics released by the Labor Department just before the COLA announcement showed consumer prices rose 0.2% last month, for an annualized increase of 2.4%.
The agency's Consumer Price Index for Urban Wage and Office Workers (CPI-W), an inflation measure factored into the annual COLA calculation, also showed on Thursday that it rose by 2.2 over the past year.
Jason Fichtner, chief economist at the Bipartisan Policy Center, said Thursday that price stability is “a good thing for today's beneficiaries,” but that “the biggest threat to seniors' economic security — Social Security “The depletion of the trust fund is imminent.”
“If lawmakers don't act, all beneficiaries will automatically and immediately face benefit cuts of more than 20% in less than a decade.The longer Congress delays, the more , the trust fund shortfall will get even bigger. Next year, with a new Congress and administration in place, is the time to find the will for bipartisan action.”
The latest statistics come weeks after the Federal Reserve cut interest rates for the first time in years. The move is seen as a sign of the central bank's confidence in its relentless fight to curb inflation.
In newly released minutes of the latest meeting held by the agency's rate-setting committee, bankers signaled confidence in the country's economic outlook.
Updated at 9:12 a.m. ET
