The increase in the cost-of-living allowance for Social Security benefits next year is likely to be about 2 percent, according to the latest data, which would be the biggest hike since 2011.
The official increase will be released in October, after the Bureau of Labor Statistics releases the September data for the Consumer Price Index, on which the cost-of-living increase is based.
But with the August inflation data released Thursday, it looks highly likely that the COLA will be close to 2 percent, much better than the 0.3 percent that millions of retirees and disabled workers received in 2017.
The Social Security Administration bases cost-of-living adjustments on inflation through the third quarter of the year, compared to the third quarter of the last year a COLA was judged necessary — in this case, 2016. If the calculation were based on three months through August, the COLA would have been 1.7 percent.
But when September's numbers are taken into account, the number is likely to go higher, because inflation is expected to rise. "September prices should rise significantly," BNP Paribas economists Paul Mortimer-Lee and Bricklin Dwyer noted Thursday, largely because of higher gasoline prices caused by Hurricanes Harvey and Irma.
The COLA is likely to end up not far from the 2.2 percent that Social Security's trustees projected in July. That would amount to about a $30 increase in benefits each month for the average retiree.
Recent years have seen small COLAs, thanks to a long spell of low inflation. In 2011, the COLA hit 3.6 percent, the last time it exceeded 2 percent. Since early 2012, inflation has generally run under 2 percent in the Consumer Price Index.