CPI

What Is the Difference Between PPI and CPI?

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What Is the Difference Between PPI and CPI? 1

These days everyone is worried about inflation. The financial media often distill reporting about inflation down to a single, easy to understand number. “Inflation rose 5% in March,” they will say. What are they talking about, exactly? What is the CPI? What is the PPI? And, what is the difference between the PPI and CPI? What Is the PPI? The PPI is the Producers Price Index. The PPI is an index that measures the average change over time in the selling prices by the producers of goods. The PPI measures price changes from the producer’s perspective. The main Producer’s Price Index is composed of the approximately 10,000 PPIs for individual products and groups of products generated each month. What Is the CPI? The CPI is the Consumers Price Index. The CPI measures the average monthly change in the prices of a set of goods and service commonly consumed by U.S. households. The CPI measures price changes from the consumer’s perspective. The CPI measures a specific set of items and services that are set in advance. How Are the PPI and the CPI Different? To understand the difference between PPI and CPI, we need to look at their construction and purpose. …

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Social Security Increase For 2021

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social security cola

Every year Social Security payments are adjusted for inflation. That means that in most years, there is an increase in the monthly benefit paid to people collecting Social Security. This year, retirees can expect a small increase. Social Security COLA for 2021 The Cost-of-Living Adjustment, or COLA, is calculated using an inflation index called the consumer price index, or CPI. The adjustment for the following year is set in October so that there is enough time to get everything processed. (It probably doesn’t take that long anymore, but the law says October, so that’s the way it goes.) Of course, in order to calculate the CPI, you have to have the whole month of data, so the best they can do in October is use the September number, which came out showing negative inflation. Social Security is never cut by COLA, so instead, it will stay the same for the following year. The increase from 2020 to 2021 was will be 1.3 percent. Income Cutoff for Paying Social Security 2021 The same index is used to determine how much income a current wage earner must pay for Social Security tax, sometimes called FICA on paystubs. Since the COLA adjustment for benefits …

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Inflation Stays Tame – Fed Not Raising Rates Soon

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Everyone is worried about if and when the Federal Reserve will raise interest rates, even though the Fed itself continues to say that it is not considering doing so. That is what happens when interest rates are so low (basically just above zero) that everyone knows the only way they can go is up.