Most Americans can’t keep up with the cost of living anymore

Nearly half of Americans call costs their biggest problem

The cost of living has become the top worry for Americans heading into 2026.

A mid-2025 Statista Consumer Insights survey found that 49% of U.S. adults named high living costs as their biggest personal challenge, well ahead of any other issue.

A December 2025 Marist poll backed that up: 70% of adults said the cost of living in their area is not affordable for the average family.

These concerns persist even though the official inflation rate has dropped sharply from its 2022 peak.

Inflation slowed but prices never came down

Here’s the part that frustrates people most: inflation has cooled, but that doesn’t mean prices dropped.

The annual inflation rate fell to about 2.4% for the 12 months ending January 2026, down from 2.7% in December, according to the Bureau of Labor Statistics. That sounds like good news until you zoom out.

Overall consumer prices have climbed roughly 23% since January 2021. Slower inflation just means prices are rising less quickly.

Food costs rose about 2.9% over the past year, and shelter costs remain high.

Grocery bills keep climbing in 2026

Your grocery receipt is not going to get smaller anytime soon. The USDA projects food-at-home prices will rise about 2.5% in 2026, just below the 20-year average.

Some categories are jumping much faster. Sugar and sweets could climb about 6.7%, and beef prices were roughly 15% higher in January 2026 than a year earlier.

The smallest U.S. cattle herd in decades and halted cattle imports from Mexico drove that spike. Non-alcoholic beverages, including coffee, could rise about 5.2%, partly because of tariffs on imports from Brazil.

Egg prices offer a rare break

Not everything is going up. Retail egg prices fell about 34% from January 2025 to January 2026, bringing a dozen large Grade A eggs to around $2.58.

That drop came after a bird flu outbreak sent prices soaring in late 2024 and early 2025. The USDA expects egg prices to fall another 27% or so over the full year of 2026 as production bounces back.

But egg prices tend to swing wildly, and another avian flu outbreak could push them right back up.

Wages are growing but still playing catch-up

Paychecks are getting bigger, but they still haven’t caught up with prices.

Since January 2021, wages have risen about 22% while consumer prices climbed roughly 23%, according to the Bureau of Labor Statistics. That leaves real wages down about 0.7% over that stretch.

The recent trend is better: real average hourly earnings grew about 1.5% from January 2025 to January 2026, and wage growth has outpaced inflation every month since mid-2023.

But lower-income workers have seen little improvement, and the damage from 2021 through 2023 is not fully repaired.

Housing stays out of reach for millions

The housing shortage keeps getting worse. More than a decade of underbuilding since the 2008 financial crisis is the core problem.

The U.S. housing supply gap widened to an estimated 4 million homes in 2025, according to Realtor.com, with other estimates ranging from about 2 million to over 7 million.

The minimum recommended income to buy a median-priced starter home hit about $86,000 in 2025, and a median-income household would need roughly seven years to save for a typical down payment.

A CBS News poll from early February 2026 found more than 8 in 10 Americans say buying a home is harder today than it was for earlier generations.

Health insurance costs spike for millions of enrollees

Health insurance got a lot more expensive in 2026.

Premiums on the Affordable Care Act (ACA) Marketplace rose about 26% on average, one of the largest jumps since the exchanges started.

The enhanced premium tax credits that had kept costs lower for over 20 million subsidized enrollees expired on Dec. 31, 2025.

KFF estimates that those subsidized enrollees are seeing their premium payments roughly double, rising about 114% on average.

Workers with employer-sponsored insurance face increases of about 6% to 7%, more than double the current inflation rate.

Electricity bills hit record highs across the country

Your electric bill probably looks worse than ever, and the numbers back that up.

The price of electricity reached about 19 cents per kilowatt-hour as of early 2026, the highest on record going back nearly 50 years.

The average American household uses roughly 899 kilowatt-hours every four weeks, which works out to about $173 a month before delivery charges and fees.

Utility rate increases approved in multiple states are adding to the burden.

Energy costs overall dipped slightly year-over-year but still eat up a big share of household budgets.

Americans dip into savings and lean on credit

People are changing how they spend to keep up. According to McKinsey research, 29% of adults dipped into their savings in the last quarter of 2025, up from 26% the quarter before.

Another 29% cut back on how much they save, and 28% leaned harder on credit cards over the same period. Consumers are switching to cheaper brands, cooking at home more, and buying fewer items.

A growing number of Americans now use buy-now-pay-later plans for everyday purchases, including groceries.

Most Americans already fell short of 2025 money goals

Americans are setting ambitious financial goals for 2026, but history is working against them.

A Harris Poll survey for the American Institute of CPAs (AICPA) found that 92% of Americans set financial goals for 2026, with 77% listing saving money as their top priority.

But 50% of those people worry rising costs will stop them from hitting those targets.

The track record is not great: 81% of people who set financial goals for 2025 said they did not stick to them, and rising costs topped the list of reasons why.

Younger and lower-income Americans feel it most

The cost-of-living crunch hits hardest at the bottom.

A Century Foundation survey found that working-class Americans are roughly twice as likely as college-educated peers to skip medication or meals because of cost.

Nearly half of adults ages 18 to 29 delayed or skipped medical care in the past year.

About 1.82 million Millennial and Gen Z households are considered “missing” in 2025, meaning those people would have formed their own households if housing were affordable.

The share of young adults living with parents is about 2.7 percentage points higher than during 2010 to 2014.

Economists expect prices to stay elevated through 2026

Relief is not coming fast. Economists at Deloitte and Fitch Ratings expect overall inflation to stay at or above 3% through 2026.

Tariffs on imports from multiple countries could push prices even higher on goods ranging from food to prescription drugs.

The bright spot: real wage growth has been positive for over two years, which may gradually restore some lost purchasing power if the trend holds.

The USDA, Federal Reserve, and major financial institutions are all watching whether consumer spending can hold up under continued pressure.

This article was created with AI assistance and human editing.

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