The Social Security cost-of-living adjustment, or COLA, for 2025 is likely to be 2.6%, based on the latest consumer price index data, released Wednesday.
The prospective COLA for next year would be about average for the last two decades and the lowest since 2021, according to an estimate provided by the independent Social Security expert Mary Johnson.
The 2024 cost-of-living adjustment for Social Security beneficiaries was 3.2%.
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) rose 2.9% in July from 12 months ago. That's level with the inflation trends indicated last month based on June inflation data, but it brought the annual pace of inflation down.
As a result, the 2025 COLA projection dropped again over the last month, falling from 2.7% to 2.6%.
Johnson cautions that the final COLA for 2025 could be different from the current estimate. This is because the COLA is calculated on the average rate of inflation during the third quarter, which is then compared against the third quarter a year ago.
July Inflation Highlights
As reported by the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers — a broader measure of inflation than the CPI-W — increased 0.2% in July on a seasonally adjusted basis, after falling 0.1% in June.
