The CPI index used to adjust Social Security benefits for cost-of-living increases is CPI-W.
CPI-W means the Consumer Price Index for Urban Wage Earners and Clerical Workers. The Bureau of Labor Statistics publishes it monthly, and the Social Security Administration uses the index to calculate annual cost-of-living adjustments, or COLAs.
The Social Security formula compares the average CPI-W for the third quarter of the year in which a COLA is determined with the third-quarter average from the last year a COLA took effect. The resulting percentage increase becomes the adjustment, subject to statutory rounding rules. Automatic Social Security COLAs began in 1975 after legislation enacted in the early 1970s.
CPI-W is often confused with CPI-U, the broader index for all urban consumers, and with Core CPI, which excludes food and energy for analytical purposes. CPI-E, an experimental index designed to reflect older Americans’ spending patterns, is sometimes proposed as an alternative but is not the index currently prescribed by law for Social Security COLAs.