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COLA Update

Consumer Prices Increase in February

Relevant to the cost- of-living adjustment (COLA) applicable to civil service annuity payments for 2025, the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased by 0.7 percent in February 2024.

The COLA applicable to payments provided in January 2024 has already been determined. There will be a 3.2 percent cost-of-living adjustment (COLA) for Civil Service Retirement System (CSRS) annuities, military retirement annuities and Social Security benefits; and a 2.2 percent COLA for Federal Employees Retirement System (FERS) annuities, effective for January 2024 payments.  
 
Each year’s COLA is determined by comparing the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from year to year, based on the average of the third-quarter months of July, August and September. 

The CPI-W figure for February 2024 was 304.284, 1 percent higher than the average CPI-W for the third quarter of 2023, which was 301.236 (1982-84 = 100). The annual COLA is determined by comparing the change in the CPI-W from year to year, based on the average of the third-quarter months of July, August, and September.  

Under current law, COLAs for federal retirement annuities, as well as for military retiree annuities and Social Security payments, are determined by 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. 

While, CSRS and Social Security COLAs are based on the annual change in the CPI-W, FERS COLAs are capped at 2 percent when the CPI-W increases between 2 percent and 3 percent, and are reduced by 1 percentage point when the CPI-W increases by 3 percent or more.

To view NARFE National President’s statement in response to the 2024 COLA, see here. 

FECA COLAs  

Individuals receiving insurance benefits under the Federal Employees Compensation Act (FECA) will receive a 3.3 percent COLA in March 2024. 

This number was determined by comparing the December 2023 CPI-W (300.728) to the December 2022 CPI-W (291.051). FECA COLAs 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). 

Looking ahead to the 2025 COLA for FECA benefits, the December 2023 CPI-W figure (300.728) is the new base figure for determining the 2025 increase.  

The Consumer Price Index for February 2024 is scheduled to be released on Wednesday, April 10, 2024, at 8:30 a.m. (ET).

Month CPI-W Monthly %
Change
% Toward
2025 COLA
July 2023 299.899 0.17
Aug. 2023 301.551 0.55
Sept. 2023 302.257 0.23
Oct. 2023 302.071 -0.06 0.28
Nov. 2023 301.224 -0.28 -0.004
Dec. 2023 300.728 -0.16 -0.17
Jan. 2024 302.201 0.49 0.32
Feb. 2024 304.284 0.7 1