US inflation remained at 3.4% year over year in August, but prices accelerated during the month, driven primarily by gasoline.

The Consumer Price Index (CPI) rose 0.4% in August, four times the 0.1% increase recorded in July, according to the latest Bureau of Labor Statistics (BLS) report.

  • Why it matters: The report directly affects consumers’ finances and provides another clue about how much Social Security COLA could increase in 2027.

Gasoline Prices Put Pressure on Family Budgets Again

Gasoline was the primary driver. Prices rose 3.9% in August and accounted for more than one-third of the monthly increase in the overall index.

  • Compared with August 2025, the increase is considerably larger: Gasoline prices are 27.4% higher, while the energy index has risen 16.3%.

Pressure was not limited to gas stations. Housing costs rose 0.3%, food away from home increased 0.3%, and transportation services climbed 0.5%.

Core US inflation, which excludes food and energy, increased 0.3% during the month, although its year-over-year rate declined from 2.5% to 2.4%.

gasoline prices, Inflation Holds at 3.4%: What It Means for Social Security COLA 2027
Inflation Holds at 3.4%: What It Means for Social Security COLA 2027 – PHOTO: Shutterstock

Social Security Gets a New Clue About the 2027 Increase

The report includes another important figure for retirees: The CPI-W rose 3.5% year over year in August and 0.4% during the month.

The Social Security Administration uses this index to calculate the COLA, the annual cost-of-living adjustment applied to benefits.

  • August is the second of three decisive months. The 2027 COLA calculation will use CPI-W data from July, August, and September.

Therefore, the newly reported 3.5% rate does not mean Social Security benefits will increase by 3.5%. September’s data are still needed to complete the calculation.

When Will the Final Social Security Increase Be Known?

The September CPI report is scheduled for release on October 14, according to the BLS calendar.

That report will complete the third-quarter data and provide a more precise picture of the adjustment Social Security beneficiaries will receive in 2027.

In the meantime, the August report sends a mixed signal: Annual core US inflation continues to moderate, but the cost of living accelerated again during the month.

For millions of households, the pressure remains visible in expenses that are difficult to avoid: gasoline, housing, transportation, and meals away from home.

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