Consumer prices rose in May, lifting U.S. inflation to its highest annual level in three years and increasing expectations for a larger Social Security cost-of-living adjustment in 2027. Independent Social Security and Medicare policy analyst Mary Johnson now estimates a 4.7% COLA for next year, up from her 4.2% forecast last month. She said the figure could rise further as more data arrives, especially if gasoline prices stay elevated.
The Social Security Administration usually announces the following year’s COLA in October, using third-quarter inflation data. Another forecast from the Senior Citizens League, a nonpartisan senior advocacy group, calls for a 3.8% increase in 2027, slightly below its earlier 3.9% estimate.
In 2026, roughly 75 million Social Security and Supplemental Security Income recipients received a 2.8% benefit increase. For the average $2,000 monthly check, that meant an extra $56 a month. Johnson said that would still fall short of what beneficiaries need to keep pace with inflation, estimating a monthly increase of $94 would be required to fully offset rising prices.
The annual Social Security COLA has averaged about 3.1% over the past decade, according to the Social Security Administration. The adjustment is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers, or CPI-W, rather than the broader CPI measure. In May, the broader consumer price index rose 4.2% from a year earlier, while CPI-W increased 4.4%.
Several categories have driven the recent jump in CPI-W, including fuel oil, which was up 64.1% over the past 12 months, gasoline, up 40.7%, and airfare, up 25%. Those increases are feeding concerns that older Americans will continue to face higher living costs even if overall inflation slows.
Inflation surged after the Covid-19 pandemic, prompting unusually large Social Security adjustments of 5.9% in 2022 and 8.7% in 2023. Although inflation eased after those peaks, prices have largely remained elevated, leaving many seniors under pressure. In an AARP survey conducted in January, 69% of adults ages 50 and older said they worry that prices are rising faster than their income, and 61% said the average $2,000 monthly Social Security payment is not enough.
Lawmakers and experts continue to debate whether CPI-W accurately reflects the spending patterns of older Americans. Critics argue that seniors often face different cost pressures than working-age consumers, particularly in housing, food and medical expenses. Because each household’s spending differs, inflation can feel much higher or lower than the national average depending on location and personal needs.
Food prices remain a particular concern. Beef and coffee have been among the grocery categories with the sharpest price increases in the broader consumer price index. Johnson noted that some older adults respond by eating less often or switching to lower-cost foods to manage expenses.
