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Prices are going up fast, but relief may be coming for Social Security recipients

The cost of food continues to climb, but projections suggest Social Security recipients may soon see the highest pay bump in 40 years.

SAINT PAUL, Minn. — The latest Consumer Price Index came out this week and overall inflation continues to be a problem, especially when it comes to food.

Despite gas prices dropping 10.5% last month, food prices overall still went up by 0.8%.

But why?

Well, some economists say retailers may be reluctant to lower their prices because higher prices mean higher profits. Plus, labor costs are still high and many of the raw materials that go into food production are still very expensive right now — things like fertilizer and cardboard.

The war in Ukraine also continues to have an impact on grain production worldwide. That's why products like grains, flour and baked goods all went up by 1 to 2 percent last month.

Egg prices also went up by nearly 3% last month after going up more than 4.3% in July.

We're seeing a concerning shift with meat, too. Beef prices were down in June and July, but went up 0.8% in August. The same thing is happening with pork, which went up 0.3% last month.

But if you're in the market for a new television, the good news is you'll save about 20% compared to this same time a year ago. Airline tickets are also getting cheaper thanks to those dropping gas prices.

And some more good news for people on Social Security, experts are predicting the biggest pay bump in 40 years. It's not set in stone, but forecasts are showing that monthly payments will likely go up by 8.7% in 2023. Tax preparers say the average American on Social Security will receive an additional $144 a month.

"The extra $100 to $200 a month certainly will go a long way for people,” CPA Scott Kadrlik said.

Kadrlik says he's already getting a lot of questions from seniors who are hearing this news. He says many are happy about the extra income, but they’re also worried that this extra money may push them into a higher tax bracket.

"It probably will not push you into a higher tax bracket and probably not cost you a significant increase in at least federal taxes,” Kadrlik explained.

He says the extra money will add up to around $1,000 to $3,000 over the course of the year and that's not enough to affect most people.

If it does, Kadrlik says the extra tax burden will only cost taxpayers a few extra dollars a year.

Social Security recipients here in Minnesota may also see another boost in pay next year.

Minnesota is one of 13 states that still tax social security payments, but lawmakers are thinking about getting rid of that.

If they do, Kadrlik says that would save the average senior a few thousand dollars a year.

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