What was the 2025 COLA for federal GS employees and how does inflation compare year-over-year?

1. What the 2025 GS increase actually was — short and plain

Active federal GS workers received a pay increase averaging about 2.0% for 2025: the administration authorized a 1.7% across‑the‑board base increase and locality pay added roughly 0.3% on average, producing the commonly cited 2.0% figure that took effect in January 2025 (National Finance Center/OPM guidance and reporting) ^{[1] [2]}.

2. How COLA for retirees differed — the bifurcated reality

Retiree COLAs are determined by CPI‑W and follow different rules for CSRS and FERS. Reporting shows Social Security and CSRS annuitants were slated to receive larger increases (around 2.5% for Social Security/CSRS in 2025), while many FERS retirees faced a “diet COLA” of 2.0% in 2025 because of statutory formulas that can reduce FERS adjustments when CPI falls in certain ranges ^{[6] [7] [8]}.

3. Why active‑employee raises aren’t the same as COLAs

Active federal pay raises are political decisions (President’s proposal, OPM/Executive Order actions, and congressional involvement) and are not automatically indexed to inflation; by contrast retirement COLAs are mechanical, tied to the CPI‑W calculation for the third quarter or annual change in that index ^{[2] [7]}.

4. How 2025 inflation compared year‑over‑year — mid‑year context

Multiple sources in 2025 show inflation moved back toward the Federal Reserve’s target zone: CPI rose 2.4% year‑over‑year in May 2025 (CNBC), and BLS/other data put mid‑2025 monthly and 12‑month readings in the roughly 2.3%–2.9% range ^{[3] [4] [5]}. Different series (CPI vs. PCE) report slightly different levels—PCE ran a bit lower in some months ^[5].

5. The gap between pay increases and price changes — modest but meaningful

A ~2.0% GS average raise in 2025 roughly tracked the mid‑year headline CPI readings that clustered in the low‑to‑mid 2% range, so the nominal pay increase kept pace with headline inflation for many employees in 2025 ^{[1] [3]}. But nuance matters: locality splits, step increases, tax/benefit changes and faster growth in specific cost categories (health care, premiums) can leave workers feeling squeezed despite parity on headline CPI ^{[9] [10]}.

6. Conflicting numbers and common misunderstandings — what reporting shows

Some outlets projected different COLA figures (e.g., 2.5% projections or 2.0% FERS/2.5% CSRS bifurcation), and advocacy groups emphasized the unfairness of FERS rules (AFGE and other analyses) ^{[11] [6]}. Reporting also produced slightly different averages for GS raises after locality—one source calculated ~2.06% average once locality was included ^[10]. These variations reflect methodology differences and the distinction between headline averages and localized pay tables ^{[10] [1]}.

7. Political and interest‑group stakes — why numbers matter

Unions and retiree groups pressed for higher raises or equalized COLAs, arguing that statutory FERS mechanics and health‑benefit cost growth erode purchasing power for federal workers and annuitants ^{[6] [9]}. The administration and OPM framed the 1.7% base plus locality approach as a calibrated, budget‑conscious step in a period of moderating inflation ^{[1] [2]}.

8. Limitations and what sources don’t resolve here

Available sources do not mention individual GS locality‑by‑locality percent changes for every locality in full detail in this dataset; they also do not provide a definitive single monthly CPI number for December 2025 in these search results. Forecasts for 2026 pay and COLA differ across reports and proposals, and exact take‑home pay effects depend on personal circumstances ^{[12] [13]}.

Bottom line: the 2025 GS average pay raise was about 2.0% (1.7% base + ~0.3% locality) and headline inflation in 2025 landed in the low‑to‑mid 2% range for much of the year, producing rough parity on paper—while statutory quirks for retirees and local cost differences produced uneven real‑world results ^{[1] [2] [3] [4]}.