Glossary · Economy
Cost of living
The cost of living is how much money it takes to buy what a household needs: housing, food, transport, energy and the rest.
Also called: living costs, living expenses
US city average, Oct 2026. A year earlier: $3.49.
Oct 2026. A year earlier: $3.24.
Oct 2026. In Oct 2006: $3.06.
In plain words
Rent, groceries, the bus pass, the electricity bill, a phone plan: add up what it takes to live for a month and you have your cost of living. When those prices rise faster than incomes, people feel squeezed, even if they earn more than before.
Economists track it with price indexes like the consumer price index, and with average prices of everyday items. In Oct 2026, a dozen eggs cost $2.32 on average in US cities, a gallon of gasoline $4.45 and a pound of ground beef $6.75.
It differs hugely by place: rent in San Francisco is several times rent in a small Midwestern town, and a dollar goes much further in Mexico City than in Zurich (purchasing-power parity).
Example
When prices rise faster than pay
- A family spends $5,000 a month: $2,000 rent, $800 food, $1,000 transport, $300 energy, $900 everything else.
- A year later rent is up 6%, food 3%, transport 2%, energy 10% and the rest 2%.
- New cost: $2,120 + $824 + $1,020 + $330 + $918 = $5,212, up 4.2%.
- If their pay rose 3%, their real income fell by about 1%: they can afford a little less than last year.
Their personal inflation rate (4.2%) depends on their own basket, which is why it can feel very different from the official rate.
One level deeper
Cost of living and inflation are related but not the same. Inflation is the change in prices; the cost of living is their level. When inflation falls back to 2%, prices do not go back down: what got dearer stays dear.
A cost-of-living adjustment (COLA) raises wages or benefits by the rise in prices. US Social Security does it every January, using the CPI for wage earners (CPI-W).
Everyday prices move very differently from each other. Over the 20 years to Oct 2026, ground beef changed by +206%, eggs by +85% and gasoline by +96%, while all consumer prices together changed by +67%.
Everyday prices over 20 years
The change in the average US city price of each item over the last 20 years, next to the change in all consumer prices. Items above the CPI bar got dearer relative to everything else.
The numbers behind the chart
| Price change over 20 years | |
|---|---|
| Ground beef | 206% |
| Ground coffee | 195% |
| Gasoline | 96% |
| Sugar | 96% |
| Chicken | 95% |
| Eggs | 85% |
| Potatoes | 82% |
| White bread | 70% |
| Electricity | 70% |
| All prices (CPI) | 67% |
| Bananas | 34% |
| Milk | 34% |
Why it matters
It decides what a paycheck is really worth: a raise below the rise in living costs is a pay cut in disguise.
It shapes where people choose to live and work, and why wages differ so much between cities.
Governments use it to set pensions, benefits, poverty lines and some minimum wages.
A common mistake
Myth: When inflation comes down, the cost of living goes back down too.
In fact: Lower inflation only means prices rise more slowly; they rarely fall back. US consumer prices are up 67% on 20 years ago (Oct 2006 to Oct 2026). What restores living standards is incomes catching up.
Questions people ask
Why does the cost of living differ so much between places?
Mostly because of housing, which varies far more by city than food or gasoline. The government’s regional price parities show prices in the dearest states well above the national average and in the cheapest well below, largely because of rent.
What is a cost-of-living adjustment?
A raise in pay or benefits that matches the rise in prices. US Social Security adjusts every January by the change in the CPI for wage earners over the year to the third quarter.
How much has the price of eggs changed?
A dozen large grade A eggs cost $2.32 on average in Oct 2026, against $3.49 a year earlier and $1.26 in Oct 2006. Outbreaks of bird flu made egg prices especially jumpy after 2022.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Consumer price index, all items (CPI-U): U.S. Bureau of Labor Statistics, Consumer Price Index, series CPIAUCSL; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Bananas, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000711211; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Ground beef, 100% beef, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000703112; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Bread, white, pan, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000702111; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Chicken, fresh, whole, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000706111; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Coffee, 100%, ground roast, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000717311; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Eggs, grade A, large, per dozen: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000708111; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Electricity, per kWh: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU000072610; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Gasoline, unleaded regular, per gallon: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU000074714; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Milk, fresh, whole, fortified, per gallon: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000709112; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Potatoes, white, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000712112; retrieved from FRED, Federal Reserve Bank of St. Louis.
- Sugar, white, per lb: U.S. Bureau of Labor Statistics, Consumer Price Index, Average Price Data (U.S. city average), series APU0000715211; retrieved from FRED, Federal Reserve Bank of St. Louis.
- BLS average prices come from the CPI survey and are less precise than the index itself; some months are missing.
- This page explains a term. It is not investment advice.