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Social Security checks could increase by 2.4% next year based on Tuesday's consumer inflation report, according to estimates by an independent analyst.

Overall consumer prices increased 2.3% from a year earlier, down from 2.4% rise the previous month and the smallest annual increase since February 2021, according to the Labor Department’s consumer price index, a measure of average changes in goods and services costs. The so-called CPI-W subset of the consumer price report that's used to determine Social Security's cost-of-living increase rose 2.1%, down from March's 2.2% increase.

The official 2026 COLA will not be determined until October because it depends on inflation data from the third quarter, which is collected between July and September. But analysts often track the estimates in the months leading up to the crucial July through September timeframe.

A 2.4% COLA would be the smallest increase since 2020 and raise the average retiree benefit in April of $1,999.97 per month by about $48. In January, the average beneficiary received a 2.5% increase, which amounted to a $50 raise to $1,957, up from $1,907 in January 2024 .

While the estimated 2.4% COLA increase is higher than last month’s forecast for 2.2%, it still may underestimate the final 2026 COLA, said Mary Johnson, independent Social Security and Medicare policy analyst.

"Trump Administration tariffs are only beginning to have an impact raising consumer prices," she said.

How could Trump's tariffs affect the COLA?

Though some of the highest of President Donald Trump 's tariffs have been lowered or paused for now, economists still believe the ones in place will be enough to increase inflation soon.

The " de-escalation with China provided some near-term relief. But the reality remains that we will still likely see inflation peaking at 3% later this year and there remains significant uncertainty around what U.S. trade policy will look like beyond the next 90 days," said Mike Reid, senior U.S. economist at Royal Bank of Canada.

On Monday, China and the U.S. said they would pause their reciprocal tariffs for 90 days . Effective from Wednesday, the U.S. will temporarily reduce tariffs on China to 30%, down from 145%, and China will reduce tariffs on U.S. goods to 10%, down from 125%.

COLA should rise in line with any inflation increases.

What is CPI-W?

The Social Security Administration bases its COLA each year on average annual increases in the consumer price index for urban wage earners and clerical workers (CPI-W) from July through September.

CPI-W is a subset of the overall consumer inflation index that looks at the price inflation experienced by working adults younger than 62, Johnson said. The problem with that is younger working consumers spend their money differently than older people covered by Medicare. For example, economists estimate younger workers spend about 7% of their budget on healthcare costs, but research and surveys have indicated that older adults tend to spend on average 15% or more of their incomes on healthcare, she said.

As a result, COLA often seems insufficient to keep up with rising costs, Johnson said.

However, this year, Johnson noted that prescription drug prices have not been growing quite as fast as in past years. Prescription drug prices rose 2.3% through April from one year ago, as measured by the Bureau of Labor Statistics. In 2023, prescription drug prices increased by 3.3% from December 2022 to December 20 2 3 before slowing down last year.

Since 2023, the Inflation Reduction Act requires drug companies to pay Medicare rebates if drug prices rise faster than inflation. “That provision, which was widely supported by Medicare beneficiaries, could be restraining runaway drug prices,” she said.

Can Trump further rein in prescription drug prices?

Trump signed an executive order on Monday encouraging linking the cost of prescription drugs to what's paid in other nations where drug prices are negotiated by their government and tend to be much lower.

The proposal is widely supported by older Americans, but it's unclear if Trump's order would lower costs, Johnson said.

“An executive order, however, is not the same thing as a law change giving Medicare the authority to use these prices in negotiations with drug companies,” Johnson noted. Courts also blocked a similar plan during Trump's first presidency.

Instead, the executive order appears to encourage direct-to-consumer sales using the most favored nation pricing, which suggests it could apply to transactions outside of Medicare coverage, she said. The executive order also mentions waivers to allow for importing prescriptions from other countries where prices may be lower.

“If that doesn’t muddy the waters enough, one has to wonder what effect tariffs would have on the final drug prices,” she said.

Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.

This article originally appeared on USA TODAY: 2026 Social Security COLA estimate up after April inflation report