The projected 2027 Social Security Cost-of-Living Adjustment (COLA) has been revised lower after U.S. inflation cooled more sharply than expected in June, signalling smaller benefit increases for millions of retirees next year.
Independent Social Security policy analyst Mary Johnson has lowered her 2027 COLA forecast from 4.7% to 3.7% following the latest inflation figures released by the U.S. Bureau of Labor Statistics (BLS).
If the estimate proves accurate, the average Social Security recipient would receive an increase of approximately $74 per month in benefits beginning in 2027.
Inflation Eases
The BLS reported that the Consumer Price Index (CPI) rose 3.5% year over year in June, down from 4.2% in May.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W)—the measure used by the Social Security Administration to calculate COLA—also slowed to 3.5%, compared with 4.4% the previous month.
Johnson described the decline as one of the most significant June drops in inflation seen over the past five years.
How the COLA Is Calculated
The official 2027 COLA will not be announced until later this year.
The Social Security Administration determines the annual adjustment using the average CPI-W readings for July, August and September, with the first of those reports scheduled for release on 12 August by the Bureau of Labor Statistics.
The annual COLA is intended to protect the purchasing power of Social Security and Supplemental Security Income (SSI) benefits for more than 75 million Americans.
Although a smaller COLA means lower benefit increases, it also reflects slower inflation, which can reduce pressure on household budgets by slowing the rise in everyday living costs.
Energy Prices Remain a Wild Card
Energy prices continue to be one of the biggest uncertainties for the final COLA calculation.
According to AAA, U.S. gasoline prices fell by around 70 cents per gallon from their peak in May, contributing significantly to June's lower inflation figures.
However, fuel prices have started to climb again in July, with the national average increasing by about 7 cents per gallon over the past week. Analysts say geopolitical tensions affecting global oil markets could reverse recent improvements in inflation.
Johnson noted that uncertainty surrounding oil prices means it is still too early to predict the final COLA with confidence.
Meanwhile, The Senior Citizens League, another organisation that tracks Social Security benefits, maintained its forecast of a 3.8% COLA, leaving both leading projections broadly aligned ahead of the official calculation later this year.
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