2027 Social Security COLA Could Be Smallest Since 2016 at 1.2% Amid Cooling CPI

The January CPI slowed to a 2.4% annual rate, below economists' average 2.5% forecast, signaling cooling inflation. If confirmed, the 2027 Social Security COLA could be 1.2%, the smallest since 2016, based on the CPI-U for July–September and the index for urban wage earners and clerical workers. January recipient benefits will see a 2.8% COLA for 2026. Core CPI excluding food and energy rose 2.5%, matching forecasts. While gas prices eased, essential costs remain elevated: grocery prices up 2.9% year-over-year and electricity up over 6%. Extreme cold is projected to raise U.S. home heating costs 11% this winter, pushing average seasonal costs to about $1,011 per household, the highest in four years and $100 higher than last winter. These trends suggest budget pressures for many households, with heating costs outpacing inflation and contributing to growing financial distress.