Social Security recipients could get a larger cost-of-living adjustment in 2027, with the latest inflation figures offering an important early indication of how much benefits may rise.
The Bureau of Labor Statistics (BLS) has confirmed that the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 3.4 percent between July 2025 and July 2026. The July reading is the first of three—alongside August and September—that will be used to determine the 2027 Social Security cost-of-living adjustment, or COLA.
Social Security benefits, which are paid to more than 75 million Americans, are adjusted annually through the COLA to help beneficiaries maintain their purchasing power as prices rise.
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The annual raise is expected to be larger in 2027 because inflation has been running hotter during 2026 than it did during the period that determined the 2026 increase. The Senior Citizens League (TSCL), a leading advocacy group for the over 50s, currently projects a 3.8 percent COLA for 2027, a full percentage point above the 2.8 percent increase beneficiaries received for 2026.
“The good news is a COLA somewhere in the upper 3 percent range remains increasingly possible, but the bad news is that the same inflation producing a larger Social Security increase is also raising the prices retirees pay for many essential goods and services,” Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.
Why It Matters
More than 70 million Americans receive Social Security benefits, and the annual COLA is designed to help those payments keep pace with inflation.
The adjustment is calculated using inflation data from the third quarter of the year, specifically July, August and September readings from the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That means Wednesday’s report will provide the first of the three key data points used in determining the next adjustment.
What To Know
The CPI tracks changes in prices paid by consumers for a basket of goods and services, including housing, food, transportation, health care and energy.
It is one of the most closely watched indicators of inflation.
Data published last month showed consumer prices rose 3.5 percent annually in June, down from 4.2 percent in May, helped in part by falling gasoline prices. And now that consumer prices are X…., experts say the outlook is hopeful.
“The outlook is cautiously positive, as seniors are increasingly likely to receive a larger COLA in 2027, but what matters more than the percentage printed on their Social Security checks is whether that increase actually is more than the growth in their regular expenses,” Beene said.
Moving ahead, economists will be watching to see whether this trend continues or whether higher energy costs begin pushing inflation upward again.
Fuel costs can ripple through the economy by raising transportation and household expenses.
“Higher energy prices eventually work their way through input costs, which means prices will likely remain higher than they were the previous year. That should continue to put upward pressure on the upcoming COLA,” Kevin Thompson, the CEO of 9i Capital Group and the host of the 9innings podcast, told Newsweek.
The Federal Reserve Bank of Cleveland’s earlier inflation forecast estimated the annual CPI inflation would remain near the mid-3 percent range, while core inflation, which excludes food and energy, remains notably lower.
What It Could Mean for Social Security
Social Security’s COLA formula does not rely on a single inflation report, but each monthly reading helps shape expectations.
The adjustment is based on the average CPI-W reading during the third quarter compared with the same period a year earlier. Because July marks the beginning of that calculation period, Wednesday’s report may significantly influence early projections.
If inflation accelerates, retirees could see a larger benefit increase in 2027. However, higher inflation also means consumers continue facing elevated prices for essentials such as housing, groceries and utilities.
“A COLA is not really good news due to the fact most of the price increases occur immediately. You are basically being compensated for inflation that has already happened,” Thompson said.
“Many seniors have to absorb those higher prices throughout the year before the COLA adjustment ever hits their Social Security check, which can leave them worse off in real time, especially when prices are accelerating.”
What Happens Next
Wednesday’s CPI report will be followed by August and September inflation readings. This will then be used to calculate the next Social Security cost-of-living adjustment.
The Social Security Administration traditionally announces the official COLA in October after all third-quarter inflation data become available.
“[This] number won’t change the equation for retirees,” Michael Ryan, a finance expert and the founder of MichaelRyanMoney.com, told Newsweek.
“If CPI comes in hotter, the COLA moves up. But seniors are paying those higher prices right now, while they wait until January to see the raise. They’re not getting ahead. They’re just trying not to fall further behind.”
