Next month’s release of key inflation figures should offer military retirees, Social Security recipients, and other federal beneficiaries an early glimpse of what trade-policy changes could mean for their annual cost-of-living adjustment.

Two predictions based on the April release of March inflation data put the 2026 COLA increase at 2.3% and 2.2%, in line with previous estimates. However, both made clear the numbers did not reflect any price changes resulting from recent tariffs; the first figures to include even a small amount of that data will be released in May.

Doing the Math

A 2.3% COLA would require the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) to rise in the next few months from its current level of 1.5% over the annual baseline figure. The average of the last three monthly CPI-W figures of the fiscal year (July, August, and September) is used to calculate the COLA.

Last year, the CPI-W rose from 1.7% in March 2024 to an average of 2.5% over those last three months – much lower than previous years’ figures, which led to near-record COLAs.

[RELATED FROM MOAA: How Your COLA Is Calculated]

Details Matter

No matter the eventual impact of trade policy on prices, it’s important to keep these factors in mind regarding inflation and the potential pay adjustment:

• Watch the numbers: Media reports on monthly inflation figures rarely mention the CPI-W, instead reflecting the CPI “for all urban consumers,” or CPI-U. These figures pull from different data sets, giving greater weights to different products.
  
  
• Trends and timing: While upcoming releases may offer a glimpse at a possible COLA, only the last three releases of the fiscal year determine the raise.
  
  
• Personal spending: While the CPI-W pulls from a “basket” of consumer spending designed to reflect overall purchasing power, an individual’s budget may not fully align with the data set. If food prices rise but other costs stay stable, for example, a retiree with a larger-than-average food budget may not see as much relief from their COLA increase.

Why MOAA Tracks COLA

Publishing monthly updates to the CPI-W at MOAA.org allows MOAA members and others to use the information in their financial planning. However, MOAA’s main interest in tracking COLA is to maintain the earned retirement benefit for those who served and their families.

Without continued inflation adjustment, this benefit would lose its value in short order. And while that may seem obvious, it hasn’t stopped lawmakers from attempting to change COLA calculations or make other budget-based decisions that would weaken retirees’ buying power.

Protecting this benefit has long been a top MOAA priority. And while no current legislation threatens these adjustments, ongoing budget constraints and an ever-present inclusion of COLA changes in a regular Congressional Budget Office report on deficit-reduction options means the issue simply cannot fall off the radar.

Keep up to date with COLA via MOAA’s COLA Watch page, and track our advocacy priorities by visiting MOAA.org/advocacy-news.