The government officially announced that the 2011 Cost of Living Adjustment for military retirees, disabled veterans, and social security recipients will be zero for the the second year in a row.
Determining COLA: The annual COLA rate is automatically set each year to adjust for the rate of inflation in the cost of living (as determined by the Consumer Price Index) based on rate of inflation for the previous year.
The 2008 CPI was used to determine the 2010 inflation rate because it was the last year in which the CPI was positive and a COLA was implemented. The August 2010 CPI was -0.1% when compared to 2008, meaning the inflation rate for 2010 was still negative and there will be no COLA for 2011.
Note: Retiree Cost of Living Adjustment (COLA) differs from the Active Duty Cost of Living Allowance which is paid based on the cost of living in a given high-cost locality. This number will be released in late December.