• News that the Consumer Price Index rose a record 8.5% in March from a year ago means Social Security beneficiaries have reduced buying power.
• Though Social Security benefits received a record 5.9% cost-of-living adjustment for 2022, those increases have since been outpaced by inflation.
• However, if inflation stays high, that could point to a bigger cost-of-living adjustment for 2023.

Social Security beneficiaries started 2022 with a 5.9% cost-of-living adjustment to their monthly checks, the highest increase in about 40 years.

But as inflation climbs with each month, the buying power of those benefit increases has diminished.

The Consumer Price Index for all Urban Consumers, or CPI-U, rose 8.5% from a year ago, according to March data released by the U.S. Bureau of Labor Statistics on Tuesday.

Meanwhile, another measure used by the Social Security Administration to calculate the annual cost-of-living adjustment, or COLA — the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W — shot up 9.4% over the last 12 months.

The average retiree benefit in 2022 rose to $1,656.30 from $1,564, a $92.30 boost per month, according to The Senior Citizens League, a nonpartisan senior group.

If those benefits kept up with inflation, the average retiree benefit instead would have to be $1,711 based on March data, an increase of $147 from the average retiree benefit for 2021, according to The Senior Citizens League.

So far this year, average retirement benefits have a shortfall of $162.60, according to the group's calculations.

Retirees are feeling the pinch as prices rise in key categories, including food, housing costs, home heating and prescription drugs. The cost of the standard Medicare Part B premium increased by 14.5% for 2022, to $170.10 per month.

Record-high inflation could point to a bigger COLA for 2023.

Based on March data released on Tuesday, the Senior Citizens League estimates the COLA would be 8.9% for 2023. That's up from the group's estimate last month for a 7.6% COLA for next year.

To be sure, future months of CPI-W data would factor into the official COLA calculation for next year. The Social Security Administration typically takes the average of the CPI-W for the third quarter of the current year and compares it to the average for the third quarter for the previous year in order to determine whether there is a COLA increase.

Some experts believe peak inflation could subside before then.

Economist Jason Furman, a Harvard University professor and former top economic advisor to President Barack Obama, tweeted on Tuesday that he sees "a glimmer of hope" due to the fact that core CPI is down and core services only rose slightly.

"The worst may now be behind us," Furman said.

Inflation started to take off in March 2021, noted Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, and it may also be a turning point this year, with a potential moderation in the coming months.

If that happens, the estimate for the 2023 Social Security COLA would be reduced.