By Anita Hamilton
Rising consumer inflation has a silver lining for retirees: It could raise their cost-of-living adjustment as well.
March's 3.3% year-over-year inflation rate, up from 2.4% in February, could translate into a COLA adjustment of 3.2% for 2026, according to Mary Johnson, an independent Social Security and Medicare policy analyst who calculates the projection. Back in January, she had pegged the increase at just 1.2%.
"This represents the biggest single month jump we've seen in inflation since 2022," Johnson said.
The 2025 COLA increase was 2.8%. That bump showed up starting in January 2026 payments.
Rising fuel prices as a result of the Iran war were a big driver of higher inflation, with gas prices rising around a dollar per gallon in March. Iran has effectively closed the Strait of Hormuz, through which one-fifth of the world's oil typically passes.
"As geopolitical tensions with Iran continue there will likely be continued upward price increases for many goods and services including groceries, and shelter as rising gasoline prices and supply chain disruptions get passed along to consumers," Johnson added.
Cost-of-living increases are based on a subset of the consumer price index data known as CPI-W. Whereas the broader CPI tracks prices affecting all consumers, CPI-W only looks at prices affecting urban hourly wage and clerical workers. As a result, it gives more weight to food, apparel, and transportation, while giving less weight to housing, medical care, and recreation.
Johnson's estimates are still preliminary and likely to change with future inflation readings. Government COLA figures are released in October and are based on annual increases for each month in the third quarter. But rising prices now have an impact on those figures since they are year-over-year figures.
Write to Anita Hamilton at anita.hamilton@barrons.com
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April 10, 2026 13:10 ET (17:10 GMT)
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