Cost of Living and Inflation

Mississippi consistently ranks as the state with the lowest cost of living in the United States. Housing is the largest factor, with median home prices and rents far below the national average. Groceries, healthcare and utilities are also relatively inexpensive compared to higher cost states like California or New York. 

While wages tend to be lower, the overall purchasing power stretches further in Mississippi, especially for households with modest incomes. This makes it one of the most affordable places to maintain a basic lifestyle without heavy financial strain.

The cost of living adjustment (COLA) for Social Security is determined each year based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). As of now, no official increase for 2026 has been announced, since adjustments are calculated annually in the fall prior to the new year. 

Historically, beneficiaries have seen increases almost every year, but the exact percentage depends on inflation trends. Retirees should follow official Social Security Administration updates to know the final COLA figure for 2026.

States such as Mississippi, Arkansas and West Virginia are often ranked easiest to live in financially because they combine low housing costs, affordable utilities and lower than average daily expenses. For example:

• Housing markets are accessible even for middle and lower income families.
• Food and transportation costs are below the national average.
• Property taxes and insurance premiums are comparatively lower. While wages may also be lower, households in these states often find it easier to meet basic needs without requiring high incomes.

The inflation rate in the U.S. changes monthly and is tracked by the Bureau of Labor Statistics (BLS) using the Consumer Price Index (CPI). As of the most recent BLS report (August 2025), inflation stands at 2.9% year over year. This is close to the Federal Reserve’s long term target of around 2%, which is considered a healthy level. 

Inflation varies by category: groceries, housing and healthcare often rise faster than technology or apparel. Households feel inflation differently depending on their spending mix.

Using the official Consumer Price Index, $100 in 1990 has the same buying power as about $240 in 2025. This means that what could be purchased for $100 in 1990 now requires more than double the amount. The calculation highlights how inflation steadily erodes the value of money over decades. 

For long term savers, this shows why keeping money in non interest accounts loses real value over time and why investing or interest bearing savings vehicles are essential to preserve purchasing power.

Inflation rarely has a single cause. It usually results from a combination of factors:

• Demand pressures when consumer demand outpaces supply.
• Supply shocks such as oil price spikes or shortages.
• Monetary policy when interest rates stay low for too long.
• Government spending and fiscal policy that inject more money into the economy. While policymakers influence inflation through interest rates and fiscal decisions, global events and consumer behavior also play major roles. In short, inflation is shaped by both policy and market forces, not one group alone.

Economists generally consider about 2% per year a healthy inflation rate for a developed economy like the U.S. This modest rise encourages spending and investment instead of hoarding cash, while avoiding the harmful effects of runaway price increases. Too little inflation, or outright deflation, often signals weak demand and can stall growth. 

Too much inflation reduces purchasing power and creates instability. The Federal Reserve manages interest rates and monetary supply with the goal of keeping inflation near this balance point.

The highest sustained inflation in U.S. history occurred during the late 1970s and early 1980s. In 1980, the annual inflation rate peaked at 13.5%, driven largely by oil shocks, loose monetary policy and global instability. Everyday goods such as gasoline and food became sharply more expensive. 

To curb this, the Federal Reserve raised interest rates to record levels, which eventually slowed inflation but also triggered a recession. This period remains the most cited example of uncontrolled inflation in modern U.S. history.

The government can influence inflation but cannot completely control it. The Federal Reserve uses monetary policy tools like adjusting interest rates and regulating money supply. Fiscal policies like government spending and taxation also impacts demand in the economy. 

However, external factors such as energy prices, global conflicts and supply chain disruptions remain outside direct government control. While policies can moderate inflation over time, short term price spikes often reflect conditions beyond policymakers’ immediate reach

Inflation affects groups differently and those with fewer protections lose the most.

• Fixed income earners such as retirees relying on savings see their money lose value.
• Low income households spend more on essentials like food and gas, so price hikes hit harder.
• Savers who keep money in accounts with interest below the inflation rate effectively lose purchasing power each year. In contrast, borrowers with fixed rate loans may benefit, since their debt repayments stay the same while the dollar’s value decreases.