Consumer prices rose again in May, pushing the annual inflation rate to its highest level in three years, according to new government data.
Independent Social Security and Medicare policy analyst Mary Johnson now estimates the 2027 cost-of-living adjustment could reach 4.7%, up from her earlier forecast of 4.2%.
Johnson warned that the figure may not be the ceiling, saying “there’s a considerable likelihood that it’s going to climb even higher than 4.7% as data continues to come in, especially on the gasoline prices.”
The Senior Citizens League, a nonpartisan senior advocacy group, is projecting a more conservative 3.8% COLA for 2027, slightly below its previous estimate of 3.9%.
The group did not explain the small downward revision, and the Senior Citizens League did not respond to a request for comment on the change.
Social Security’s annual COLA is calculated using the Consumer Price Index for Urban Wage Earners and Clerical Workers, commonly referred to as the CPI-W.
The Bureau of Labor Statistics reported that broad CPI inflation rose 4.2% over the past 12 months through May, while the CPI-W climbed 4.4% over the same period.
Among the sharpest price increases tracked by the CPI-W over the past year, fuel oil surged 64.1%, gasoline jumped 40.7%, and airfare climbed 25%.
Pressure on oil and gas prices has driven overall inflation to its highest point since April 2023, intensifying financial strain on retirees and other fixed-income beneficiaries.
Johnson noted that inflation as measured by the COLA index is growing at its fastest pace in four years, calling it “hard to quantify as it hits consumers now, but it clearly is causing enormous cost pressures especially difficult for low income and older Americans living on fixed incomes.”
She added that “Social Security recipients received a 2.8% COLA this year raising average monthly benefits of $2,000 about $56, but would need $94 per month to keep up with May inflation.”
If a 3.8% COLA were applied, the average retiree benefit would rise by $77 per month, bringing the average payment from $2,026.41 to $2,103.41.
Medicare costs continue to complicate the picture, with monthly Part B premiums rising 9.7% for 2026 at the same time the COLA increased benefits by only 2.8%.
Seniors should expect a significant portion of any 2027 COLA increase to be offset by continued growth in health care expenses.
The Social Security Administration typically announces the official COLA each October, using finalized CPI-W data from the third quarter, meaning current estimates remain preliminary.
