The latest forecast for the Social Security Administration's annual cost of living adjustment, or COLA, has climbed from last month's prediction, based on the June 2023 consumer price index report, released Wednesday.

The COLA increase, which is based on the consumer price index for urban wage earners and clerical workers, could be as high as 3% next year, according to the Senior Citizens League. The number is a small climb from June's prediction, which estimated the annual increase would be 2.7%.

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"The index that’s used to determine the COLA, was up only 2.3 percent year over year," the League said in a statement Wednesday. "However, the average inflation rate over the past twelve months rose slightly and thus affected our COLA estimate, rising from 2.7% last month to 3% based on the June data."

In comparison, the COLA for last year was an 8.7% increase, and 5.9% the year before that.

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Annual inflation slowed to 3% in June, a full one-point drop from May's headline inflation reported by the Bureau of Labor Statistics. The change is a positive development in light of the Federal Reserve's efforts to lower price pressures by raising interest rates. Wednesday’s report marks 12 straight months of declines in annual inflation after the rate peaked at a whopping 9.1% last June.

The SSA's official announcement of next year's COLA will come in October, so the estimate is still likely to change. The final determination is based on the average inflation rate and CPI-W of the months in the year's third quarter: July, August, and September.