Do We Need a Price Index for the Elderly?

IB#15-18

The brief’s key findings are:

  • The recent news of no Social Security COLA in 2016 will prompt some to argue that an inflation index for the elderly only would have shown a rise in prices.
  • Historically, an experimental index for the elderly (the CPI-E) has regularly risen more quickly than the broader index used for the COLA (the CPI-W).
  • However, since 2002, average CPI-W and CPI-E inflation have been virtually identical due mainly to slower growth in health costs.
  • If health cost growth stays modest, the two indexes may remain similar.  But if it surges again, it may be time to use an index designed specifically for the elderly.