The cost of living doesn’t stay steady; it rises and falls depending on inflation, economic shifts and local market trends. Some years bring steep increases, while others see slower growth or even brief periods of stability. Everything from housing demand to energy costs and regional wages influences how far your money stretches.

As 2025 unfolds, keeping track of these patterns can help you make smarter financial choices, whether you’re planning a move, adjusting your budget or just staying informed on economic trends. Bankrate breaks down the latest data to show where costs are climbing the fastest — and where you might find a more affordable living situation.

Cost of living statistics 2025

The cost of living increases by year appear to be slowing, but some key household essentials are still seeing elevated price increases. Multiple recent data points, including Bankrate’s surveys, also confirm the sentiment that, despite what the overall numbers suggest, budgets remain strained:

Key takeaways

• The cost of shelter rose by 4.4% last year (2024), according to the CPI.
• The cost of home insurance has been on the rise in recent years with premiums averaging $2,258 in February 2025, according to Quadrant Information Services.
• According to Redfin, a household earning the median U.S. income ($83,782) would’ve had to spend 41.8% of their income to afford a median-price home in America in 2024.
• Redfin also reported that, in order to get monthly housing costs to a manageable 30% or less, households would need to make at least $116,782 per year.
• 51% of would-be homeowners who responded to Bankrate’s Down Payment Survey said that the high cost of living or their income not being high enough has held them back from affording a down payment and closing costs for a home.
• According to the CPI, transportation services, another major spending group, increased 8% at the year-end of 2024.
• Between 2025 and 2024, the average cost of full coverage car insurance increased by 12%, according to Bankrate’s True Cost of Auto Insurance Report.
• Bankrate’s True Cost report found Americans now spend around 3.39% of their total household income on car insurance.
• 48% of credit card holders are carrying a balance from month to month. Of that group, 47% say they are in debt due to an unexpected or emergency expense, according to Bankrate’s Credit Card Debt Survey.

Cost-of-living adjustments

Each year, the Social Security Administration (SSA) adjusts benefits to account for inflation, ensuring recipients maintain their purchasing power as living expenses fluctuate. These cost-of-living adjustments (COLA) are based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

For 2025, Social Security and Supplemental Security Income (SSI) benefits will see a 2.5 percent increase. This adjustment means higher monthly payments for more than 72.5 million Americans, helping to offset rising costs in housing, healthcare and everyday needs.

Key COLA adjustments for 2025

• Social Security benefits will increase by 2.5%, starting in January 2025.
• SSI recipients saw higher payments that began December 31, 2024.
• The maximum taxable earnings limit for Social Security will rise from $168,600 to $176,100.
• Earnings limits for early retirees will increase:
• Workers younger than full retirement age can earn up to $23,400 before benefits are reduced.
• Those reaching full retirement age in 2025 can earn up to $62,160 before reductions apply.

Cost of living by state

Every year, the Council for Community & Economic Research (C2ER) publishes a report that details the cost of living by state. The ranking is based on a price index that is calculated using the cost of food, housing, transportation, utilities and other factors in all 50 states and Washington, D.C. An index of 100 is average, and any index above 100 indicates that a state is more expensive than average. Likewise, an index less than 100 implies that a state is more affordable than average.

Most expensive states to live in 2025

According to the C2ER study, Hawaii topped the list of most expensive states by 41 points, with Massachusetts, California and Washington, D.C. trailing close behind.

Least expensive states to live in 2025

The C2ER study found that West Virginia had the lowest cost of living in the U.S. Bankrate’s research also found that West Virginia has relatively low average home insurance costs, coming in $1,249 cheaper than the national average as of February 2025 for $300K of dwelling coverage. The low cost of living combined with more affordable home insurance may make living in West Virginia relatively cost-effective for homeowners.

Bottom line

The cost of living is always changing, driven by inflation, wage growth and local market trends. While national data like CPI reports and COLA adjustments give a broad view, what really matters is how these shifts affect your day-to-day finances based on where you live and how you spend.

In 2025, Social Security recipients will see a 2.5 percent COLA increase, but for many, that won’t be enough to fully keep up with rising costs. Housing remains a major challenge, with 37 percent of Americans saying they’d consider moving out of state to find more affordable housing, according to Bankrate’s Home Affordability Survey.

If you’re weighing your financial options or thinking about relocating, a cost-of-living calculator can help you compare expenses between cities and states. Staying on top of economic trends and adjusting your budget as needed can make it easier to keep up with shifting costs.

https://www.bankrate.com/insurance/homeowners-insurance/cost-of-living-statistics/

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