The government says there will be no benefit increase next year for millions of Social Security recipients, disabled veterans and federal retirees.
It's just the third time in 40 years that benefits will remain flat. All three times have come since 2010.
The main reason for no increase next year is low gas prices.
By law, the annual cost-of-living adjustment — or COLA — is based on a government measure of inflation. The government said Thursday that inflation is being pulled down by lower gasoline prices.
The announcement will affect benefits for more than 70 million people — that's more than one-fifth of the nation's population.
The total includes almost 60 million retirees, disabled workers, spouses and children who get Social Security benefits.
"The big story has been the plunging gas prices," said Dean Baker, co-founder of the Center for Economic and Policy Research. "There's not a lot of inflation anywhere."
U.S. & World
The announcement affects benefits for more than 70 million people, more than one-fifth of the nation's population. That includes almost 60 million retirees, disabled workers, spouses and children who get Social Security benefits.
The average monthly Social Security payment is $1,224.
The cost-of-living adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, a broad measure of consumer prices generated by the Bureau of Labor Statistics. It measures price changes for food, housing, clothing, transportation, energy, medical care, recreation and education.
The COLA is calculated by comparing consumer prices in July, August and September each year with prices in the same three months from the previous year. If prices go up, benefits go up. If prices drop or stay flat, benefits stay the same.
The numbers for July and August show that, overall, consumer prices have fallen since last year. Fuel prices are down by 23 percent from a year ago, according to the August inflation report. But prices for some other goods and services, such as health care and housing, are up.
The CPI-W numbers for September are being released Thursday, providing the last piece of the puzzle.
