The September Consumer Price Index announced the morning of October 24  shows inflation at 3%, prompting a 2.8% Social Security increase for 2026. Inflation remains above the Fed’s 2% target.   Closing that gap will remain tough.  On the somewhat brighter side,   3% is well below the post-COVID spikes during 2022 and 2023.

It’s crucial to clarify a common misconception: inflation is a measure of how fast prices are rising. It is a measure of changes in price level, not a measure of price levels.  Arithmetically, even if the economy achieves the FED's target inflation rate of 2%,  the price level will remain higher than before Covid. This will prove vexing for those who yearn for the lower prices of 2019. Such a reduction in prices would require a deep recession for a few years; the better solution would be to have Price inflation settle at the 2% target and wages rise to produce the purchasing power of 2019. A big part of our "affordability problem" is that we are for short of wages rising to that level. 

Consider a numerical example:  for example, if eggs cost $3 last year and $3.09 this year, that’s a 3% increase.   If egg-price inflation is zero next year, the price would remain at $3.09. 

Finally, thanks to the CPI’s role in indexing Social Security, retirees will see a modest bump in benefits to help offset the continued rise in "the cost of living."