How Much Will Inflation Impact Your Salary in 2026? Experts Weigh In
Written by
Cindy Lamothe
Edited by
Zuri Anderson
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Ever feel like your paycheck just doesn’t stretch quite as far as it used to?
You’re not imagining it: Prices have been creeping up, and inflation isn’t done with us yet. According to The Guardian, 75% of Americans report soaring prices.
As 2026 approaches, many workers are wondering: Will our salaries keep up, or will our budgets take another hit? GOBankingRates asked experts to break down what to expect — and how inflation could shape your paycheck in the year ahead.
Inflation Will Impact the Purchasing Power of Your Salary Next Year and Every Year After That
“Inflation is going to impact the purchasing power of your salary next year and every year after that,” said Joseph Favorito, certified financial planner and managing partner at Landmark Wealth Management.
He explained that inflation has averaged 3.25% annually for the last century.
“The most recent [Consumer Price Index] CPI number is annualized at 3.97%, slightly above the average, but well below the excess inflation of 2022 and 2023 that was as high as 9%,” Favorito added.
He also noted that inflation is a function of the money supply.
“During 2021 the Federal Reserve expanded the M2 money supply by about 40% in 18 months, which was unprecedented,” the financial planner said. “Not surprisingly, we saw substantial inflation. Today M2 is growing at closer to 4.5% year over year, which is more in line with historical averages.”
Inflation’s Impact on Salaries in 2026 Will Likely Extend Beyond Simple Loss of Purchasing Power
“Many workers will face what I call the ‘double cost’ of inflation,” explained Anna Baluch, insurance and finance expert at BestMoney.
On one side, she said prices for essentials such as housing, food and healthcare continue to climb faster than most pay raises. On the other, Baluch noted employees must spend extra time and energy negotiating higher wages just to stay even.
“This negotiation process can be stressful and costly, both emotionally and financially,” Baluch said.
Even when companies raise pay, the increases often fall short of inflation because employers are managing their own rising costs and uncertain economic forecasts.
The Best Way To Prepare Is To Take a Proactive Approach
According to Baluch, workers should plan to review their compensation early in the year and come prepared with data about market pay rates and their performance results.
Strengthening skills or certifications can also improve your leverage during salary discussions. In addition, she said building multiple income streams and keeping a flexible budget can help cushion the blow of higher prices.
“Inflation will continue to test household finances, but those who anticipate its effects and take deliberate steps to adjust can protect their financial stability in 2026 and beyond,” Baluch concluded.
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