The chained consumer price index (chained-CPI) is believed to better reflect actual inflation than the current indices and may therefore be a mechanism to reduce the size of cost-of-living adjustments. However, its calculation may not reflect the lives of recipients, and its use in benefit calculation may place people at risk for poverty.

Consumer Price Indices and Cost of Living Adjustments

The measurement of a consumer price index (CPI) in the United States is a critical contributor to decisions about both the tax code and the operations of a variety of programs. A CPI not only guides the setting of annual cost-of-living adjustments but also determines eligibility thresholds, reporting requirements, and payment rates for a variety of programs. A CPI compares the price of a fixed ...

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