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How much of a raise to keep up with inflation?

Updated

To keep up with inflation, you need a raise of at least 3.7%: prices rose 3.7% in the 12 months to September 2026 (BLS). Below that, your pay buys less than a year ago. Over the same 12 months, average hourly earnings rose 3.0%, so real earnings fell 0.7%.

Your raise after inflation

What a raise buys after 3.7% inflation
Your raiseAfter inflation
2.0%−1.6%
3.0%−0.7%
3.5%−0.2%
3.7%0.0%
4.0%+0.3%
5.0%+1.3%
7.0%+3.2%
10.0%+6.1%

The formula: real raise = (1 + raise) ÷ (1 + inflation) − 1.

What happened to pay overall

  • Average hourly earnings: +3.0% over 12 months, −0.7% after inflation (BLS, Real Earnings, September 2026).
  • Wages and salaries: +3.1% over 12 months, −0.6% after inflation (BLS, Employment Cost Index, September 2026).
  • One year earlier, inflation was 3.0% (12 months to September 2025).

Inflation is not the same everywhere

Inflation over the 12 months to September 2026, by U.S. region (CPI-U)
RegionInflation
Northeast4.2%
Midwest4.2%
South3.4%
West3.4%

Inflation is a floor, not your number

Inflation keeps your pay where it was. The market says what your job pays now: if your pay is below the median for your job and city, the gap is a stronger case than inflation. Am I underpaid?

See where your pay stands for your job and city. Takes 30 seconds. Free, no sign-up.

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Questions

Is a 3% raise enough to keep up with inflation?

Not at current inflation. Prices rose 3.7% in the 12 months to September 2026: a 3% raise buys 0.7% less.

Which inflation figure should I use?

The all items CPI-U over the latest 12 months, from the BLS: 3.7%. Core inflation (2.6%) leaves out food and energy, which you still pay for.

How do I calculate my raise after inflation?

Divide 1 plus your raise by 1 plus inflation, and subtract 1. A 5% raise with 3.7% inflation: 1.05 ÷ 1.037 − 1 = 1.3%.

Sources