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Cost of living facts and statistics 2024
Inflation and the cost of living are not one and the same. Although inflation does have a hand in determining the cost of living, low levels of inflation do not always mean lower costs of living. Data from the Consumer Price Index (CPI), a key metric from the Bureau of Labor Statistics used to measure inflation, show that prices increased 3.2 percent between February 2023 and February 2024. This is a significant dip from the staggering 9.1 percent peak in June 2022 — the highest in more than 40 years. However, slowing inflation doesn’t mean prices are falling, and prices directly impact how Americans’ finances are faring. Bankrate takes a closer look at cost of living statistics and uncovers the states that are the most expensive and affordable in today’s economic landscape.
Cost of living statistics 2024
Inflation is slowing, but some key household essentials are still seeing elevated price increases. Multiple recent Bankrate surveys also confirm the sentiment that, despite what the overall numbers suggest, budgets remain strained:
🏡 Key takeaways
3 in 5 workers (60%) said their incomes hadn’t kept up with inflation throughout 2023, according to Bankrate’s pay raise survey.
Bankrate’s pay raise survey also found that 64% of workers received a pay increase at some point in the 12 months since October 2022. Of that group, 53% said their incomes haven’t kept pace with inflation.
Shelter is a significant spending category for most Americans. In 2022, Americans spent 33.3% of their income on housing, per the Bureau of Labor Statistics.
The cost of shelter rose by 5.7% from February 2023 to February 2024, according to the Consumer Price Index.
51% of would-be homeowners who responded to Bankrate’s down payment survey said that the high cost of living has held them back from affording a down payment and closing costs for a home.
The cost of home insurance has been on the rise in recent years with premiums averaging $2,151 in April 2024, according to Quadrant Information Services.
Transportation services, another major spending group, increased 9.9% from February 2023 to February 2024, per the CPI.
Data from the Bureau of Labor Statistics show that in 2022, Americans spent 16.8% of their income on transportation.
From 2023 to 2024, the average cost of full coverage car insurance increased by 26%, according to Bankrate’s true cost of auto insurance report.
That same report found Americans now spend around 3.41% of their total household income on car insurance.
49% of credit card holders are carrying a balance from month to month. Of that group, 43% say they are in debt due to an unexpected or emergency expense, according to Bankrate’s credit card debt survey.
Cost-of-living adjustments
The Social Security Administration bases its annual cost-of-living adjustment (COLA) on a subset of the CPI for urban wage earners and clerical workers, or CPI-W for short. The COLA measures how much monthly Social Security benefits change to account for inflation, so that Social Security recipients may maintain the same purchasing power. The COLA in 2023 was 8.7 percent — the highest in more than 40 years as inflation soared — but dipped to 3.2 percent in 2024 as price pressures cooled:
🏡 Key takeaways
The 3.2% COLA increase rounds out to about $59 extra per month in benefits, from an average of $1,848 per month to $1,907, according to the Social Security Administration (SSA).
Upward of 66 million Americans receive Social Security income every month, per the SSA.
The COLA average over the past 20 years is about 2.6%, according to historical data from the SSA.
The Congressional Budget Office predicts a COLA of 2.5% for 2025.
The Senior Citizens League, on the other hand, predicts a more modest 1.75% increase.
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 state to live in 2023
Hawaii topped the list of most expensive states by nearly 34 points, according to the C2ER study. Washington, D.C. trailed behind and was closely followed by Massachusetts.
Hawaii — Index: 180.3
Washington, D.C. — Index: 146.8
Massachusetts — Index: 146.5
California — Index: 138.5
New York — Index: 125.9
Alaska — Index: 125.2
Maryland — Index: 116.5
Washington — Index: 116.0
Vermont — Index: 115.3
Oregon — Index: 114.7
Least expensive state to live in 2023
The C2ER study found that Oklahoma had the lowest cost of living in the U.S. However, Bankrate’s research found that Oklahoma has one of the highest average home insurance costs in the country. Although its home insurance is far more expensive than average, it could be balanced out by more affordable prices for things like food, electricity and other costs included in the C2ER study.
Oklahoma — Index: 86.2
Mississippi — Index: 86.3
Kansas — Index: 87.1
West Virginia — Index: 87.7
Alabama — Index: 88.3
Missouri — Index: 88.5
Arkansas — Index: 89.0
Tennessee — Index: 90.3
Iowa — Index: 90.3
Michigan — Index: 90.6
Bottom line
While looking at CPI data, COLA and costs of living by state can be helpful, looking at the numbers alone may not be enough to determine how much your individual cost of living has risen. After all, the cost of living is unique to an individual, their finances, location and lifestyle. Although the much-feared recession hasn’t quite yet reared its head, three in five U.S. adults (59 percent) reported feeling like the economy was in a recession toward the end of 2023, according to Bankrate’s pay raise survey.
Almost two in five (37 percent) of people who would be willing to make a sacrifice for affordable housing would move out of state to find a home they could afford, according to Bankrate’s home affordability survey. Before breaking your lease or listing your home, you can use our cost of living calculator to see how much it would potentially be to live in a different city or state.
Frequently asked questions
Which U.S. state has the lowest cost of living? According to a study from the Council of Community & Economic Research, Oklahoma has the lowest cost of living in the country, with an index of 86.2 (while the average is 100), according to a study from the Council for Community & Economic Research. Mississippi is the second-cheapest state in the country, with a cost of living index of 86.3.
What is the average cost of living in the U.S.? The average cost of living in the U.S. will depend on the individual. Cost of living is the amount of money one needs in order to keep their current lifestyle in a particular place, so the dollar amount will vary widely based on location.
What is a cost-of-living increase? A cost of living adjustment (COLA) is a change in monthly Social Security benefits that accounts for inflation. In a high-inflation environment, you may see a more dramatic COLA increase. This is so that Social Security recipients can maintain the same purchasing power even when inflation drives prices up.
