January 12, 2018

Consumer Prices Decrease in December, FECA COLA will be 2.2 Percent

Relevant to the cost-of-living-adjustment to civil service annuities for 2019, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) decreased just slightly by 0.06 percent in December 2017.

As announced in October, federal retirees will receive a 2.0 percent cost-of-living adjustment (COLA) to their civil service annuities beginning in January 2018; the same is true for Social Security benefits and military retirement annuities.

The new CPI-W figure for December 2017 was 240.526, 0.36 percent higher than the average CPI-W for the third quarter of 2017, which will be used to determine the 2019 COLA, and was 239.668 (1982-84 = 100).

Under current law, COLAs for federal retirement annuities, as well as for military retiree annuities and Social Security payments, are determined in reference to the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), which is calculated by economists and statisticians with the Bureau of Labor Statistics (BLS). The CPI-W is the current index used for measuring increases in the prices of consumer goods, including food and beverages, housing, clothing, transportation, medical care, recreation, education, communication, and more. To learn more about how the BLS calculates the CPI-W, please click here.

NARFE continues to support strong COLAs based on fair assessments of increases in consumer prices to protect the value of federal annuities from inflation. NARFE specifically supports a switch to the Consumer Price Index for the Elderly (CPI-E), which would result in higher COLAs and opposes a switch to the Chained CPI, which would result in lower COLAs.

FECA COLAs

Individuals receiving insurance benefits under the Federal Employees Compensation Act (FECA) will receive a 2.20 percent COLA in March 2018.

This number was determined by comparing the December 2017 CPI-W (240.526) to the December 2016 CPI-W (235.390). FECA COLA’s are determined by a different statutorily-set methodology than the COLA for other federal retirees. Benefits awarded under the Federal Employees Compensation Act (FECA) to individuals suffering work-related injuries or illnesses, are adjusted according to each calendar year’s percentage change in the CPI-W (rather than as measured by the change from the highest previous third quarter average).  

The Consumer Price Index for January 2018 is scheduled to be released on Wednesday, February 14, 2018, at 8:30 a.m. (EDT).

CPI-W Monthly % Change % Toward 2019 COLA
July 2017 238.617 -0.08 -
Aug. 2017 239.448 0.35 -
Sept. 2017 240.939 0.62 -
Oct. 2017 240.573 -0.15 0.38
Nov. 2017 240.666 0.04 0.42
Dec. 2017 240.526 -0.06 0.36