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CPI-E Advanced in New Congressional Bill
U.S. Rep. Ruben Gallego (D-AZ) recently introduced legislation that could increase the monthly benefits paid to seniors by requiring the Social Security Administration to use a different inflation-calculation formula. His bill, titled the “Boosting Benefits and COLAs for Seniors Act,” calls for replacing CPI-W–the metric currently used to calculate cost-of-living adjustments–with the “Consumer Price Index for Americans 62 years of age and older,” commonly known as CPI-E.
CPI-E is a research price index designed to measure price changes using the spending patterns of older Americans.[1] BLS has said there are several limitations to the validity of CPI-E as it is currently calculated. Under its current data collection, CPI-E uses data from the CPI-U calculation based on the subset of survey respondents with a household member over age 62. The prices collected are not based solely on data statistically significant to the over-aged 62 population, such as which items, where the items are purchased, and the impact of senior discounts on the pricing of these items. Before CPI-E can be used to calculate the COLA, DOL must improve its collection methods for this index.
[1] U.S. Bureau of Labor Statistics, R-CPI-E Homepage, https://www.bls.gov/cpi/research-series/r-cpi-e-home.htm, last modified March 14, 2023.
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