It has agreed new care rates for the 850 or so people in residential care or nursing homes, as well as those who receive short stay and respite care or domiciliary care at home.
The funding is a "welcome boost to adult social care in the City" and has been made available through the Adult Social Care precept - a 2% increase on Council Tax permitted by the Government to help local councils meet rising social care costs.
The rates, approved by the council's Cabinet Resources Panel last week, have been reviewed to help care providers meet increases in the National Living Wage, which went up by 30p per hour on 1 April, and inflation, with the Retail Price Index up by 1.6% year on year.
Councillor Sandra Samuels OBE, the City of Wolverhampton Council's Cabinet Member for Adult Services, said: "We are determined to do all we can to ensure high quality residential, nursing and domiciliary care is available with the City and one way we are doing this is by supporting local providers by introducing improved care rates.
"Staffing typically represents around 60% of overall costs for care providers and so they are affected by factors such as inflation and other wage increases. It can also impact on their ability to recruit and retain experienced workers.
"This is a welcome boost to adult social care in the City, and as well as residential and nursing care providers, we are supporting respite and domiciliary care providers. This reflects our ambitions to enable more people to live independently in their own homes, and ensure that only those people with the most significant needs or dementia require residential and nursing care."
- released: Wednesday 5 April, 2017