Millions of Social Security recipients now have a much clearer picture of how large their 2027 cost-of-living adjustment could be after the federal government released the second of three inflation readings used to calculate next year's increase. The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 3.5 percent in the 12 months through August, the Bureau of Labor Statistics reported Friday. The CPI-W stood at an index level of 328.481 in August.
That figure is particularly important for Social Security because it, not the more widely reported headline inflation rate, is the measure used to calculate the annual cost-of-living adjustment, or COLA. The broader Consumer Price Index for All Urban Consumers (CPI-U), generally referred to simply as the CPI, increased 0.4 percent in August from the previous month on a seasonally adjusted basis and was 3.4 percent higher than a year earlier. Friday's figures bring the final 2027 COLA calculation closer to completion: August is the second month of the three-month period used to determine the adjustment, meaning only September's CPI-W figure is now outstanding.
More than 75.7 million people were receiving Social Security, Supplemental Security Income, or both as of July, according to the latest Social Security Administration data. For beneficiaries, the annual COLA determines how much their payments will rise at the beginning of the following year to account for increases in consumer prices. The 2027 adjustment is drawing particular attention after inflation accelerated earlier this year.
In July, the CPI-W was 327.104, up 3.4 percent from July 2025. The headline CPI-U was also 3.4 percent higher year over year in July and rose 0.1 percent from June on a seasonally adjusted basis. Social Security recipients received a 2.8 percent COLA for 2026, following increases of 2.5 percent in 2025 and 3.2 percent in 2024.
The much larger 8.7 percent adjustment paid in 2023 followed the surge in inflation earlier in the decade. Before Friday's August inflation report, The Senior Citizens League projected a 3.6 percent COLA for 2027, down from its earlier forecasts of 3.8 percent in June and July. The group said its August projection was based on July's 3.4 percent annual increase in the CPI-W.
The annual CPI-W inflation rate reported Friday should not be confused with the eventual Social Security COLA. Under federal law, the Social Security Administration calculates the adjustment by taking the average CPI-W index level for July, August and September and comparing it with the average from the same three months in the last year in which a COLA became effective. The percentage increase is then rounded to the nearest one-tenth of 1 percent.
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