The cost of living adjustment (COLA) is based on the Consumer Price Index (CPI), a measure of inflation that the U.S. Commerce Department calculates by tracking changes in the prices of certain goods and services. Every fall, officials examine the CPI numbers. If they show inflation, beneficiaries receive an increase in their checks starting the following January. Due to the CPI numbers, beneficiaries receive a 1.7 percent increase for 2013. There was an increase of 3.6 percent in 2012, but no rise in 2010 and 2011.
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