Here is an excerpt from Merrill Lynch research piece today on September CPI to be released next week:
Consumer prices likely rose by 0.3% mom in September, lifting the year-on-year rate to 1.5%. We see a healthy gain in energy prices (up 2.6% mom), although food prices were likely once again weak. Excluding food and energy, we see a mere 0.1% mom increase: the previous months’ gain looks outsized, particularly for medical care commodities prices and we could get some payback. In this scenario, the year-on-year rate for core CPI could slow slightly to 2.2%
This probably means that CPI-W will be positive year-over-year, and the Cost-of-Living-Adjustment (COLA) will be positive for next year (although small). But even with a small increase in COLA, the contribution base will increase significantly.