Expert: Here’s What Lies Ahead for Inflation and Affordability in 2026
Written by
Gabrielle Olya
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Molly Sullivan
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Inflation may be cooling, but Americans are still feeling the pinch — the December 2025 Consumer Price Index showed prices rose 0.3% month-over-month and 2.7% year-over-year.
Niladri “Neel” Mukherjee, chief investment officer at TIAA Wealth Management, warns that 2026 won’t bring major relief for consumers. Here’s what he predicts for inflation and affordability in the year ahead — and what it means for your wallet.
2026 Inflation Outlook: Why Prices Will Likely Stay High
Mukherjee expects inflation to remain high throughout 2026.
“Inflation should remain elevated, given healthy economic activity and some tariff pass-through to consumers,” he stated in TIAA Wealth Management’s End of Year Outlook.
This pressure will hit lower-income households hardest.
“Elevated prices of everyday goods, utility costs, etc., are likely to stress the finances of lower-income consumers,” Mukherjee told GOBankingRates. “A challenging hiring environment could also lead to this cohort of consumers becoming more cautious with their discretionary spending.”
However, early-year tax refunds may provide temporary relief, he said.
Tariff Cuts and Rate Drops May Ease Some Costs
It’s not all bad news for our wallets. Mukherjee anticipates more government intervention aimed at affordability — especially ahead of midterm elections.
“It is likely that tariff rates stabilize, and even move lower over the course of the year, as the Trump administration assumes a more targeted framework for tariffs, focusing on certain industries deemed critical for national security,” he said.
“If this happens, consumers may see some relief in prices of imported goods.”
Housing Affordability Could Improve
Another bright spot for the coming year is a more affordable housing market. Mukherjee expects the Federal Reserve to cut rates by 25 to 50 basis points, which could push mortgage rates lower.
“Housing affordability may improve as the Fed cuts rates and mortgage rates move lower, giving a boost to refinancings and sales,” he said.
While inflation isn’t disappearing, strategic policy shifts and rate cuts could offer pockets of relief. Staying informed — and sticking to a budget — will be key to navigating 2026.
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