No one likes inflation, particularly retirees who are on a fixed income. Inflation in the past 12 months has jumped for older Americans, as well as for the nation as a whole — but not evenly, and not in some of the places you might expect it most.
The Bureau of Labor Statistics (BLS) produces the Consumer Price Index for All Urban Workers, or CPI-U, which is what you typically see in headlines as the government’s gauge of inflation. By that measure, inflation rose 6.8 percent the 12 months ended November, the largest 12-month increase since June 1982.
With much less fanfare, the BLS also produces the CPI-E, which reflects inflation for those 62 years of age and older. For example, medical care services, such as doctor and dentist visits, have a 9.7 percent weighting in the CPI-E, compared to 7 percent for the CPI-U. The CPI-E has risen 6.2 percent the past 12 months, slightly less than the broader CPI-U.
Inflation doesn’t hit all items by the same amount, however, nor does it affect all budgets the same way. Your personal inflation rate could be higher or lower than the index, depending on where you live and what items you buy the most.
Nevertheless, any increase in inflation can hit retirees hard, despite the 5.9 percent Social Security cost of living adjustment (COLA) that goes into effect in January. Here are the five areas that have seen the biggest price jumps for those 62 and older.
The CPI-E gives slightly less weight to gasoline than the headline CPI, but it’s the price that nearly all consumers know off the top of their heads. Gas prices soared 58.1 percent the 12 months ended November. The price of a gallon of unleaded gas now costs $3.33, according to the American Automobile Association (AAA), up from $2.16 a year earlier.
There’s some good news that the current CPI data has missed: Gas prices have retreated slightly in the past four weeks, from when a gallon of fuel cost $3.41. Crude oil peaked at $85.4 a barrel in October; it closed at $71.67 on Dec. 10. OPEC and its allies announced that they would increase oil production by 400,000 barrels per day in January, which should further ease gasoline prices. But there’s some bad news buried in that good news, says AAA spokesman Andrew Goss. “A potential COVID-19-induced economic slowdown hurts everyone and could prompt OPEC to slash production if oil prices drop too low.”