Doncaster Council's adult social care bill rose by £3 million just to cover inflation and a rise in the National Living Wage.
A report seen by councillors shows a council strategy to 'reduce care home placements' by 'supporting more people at home' which will 'potentially further increase vacancies;.
Figures show a price inflation of £1.75 million for residential and nursing care.
Another £424,000 was budgeted for an increase in home care and £695,000 to aid supported living for residents.
Figures show an increase of more than £386,000 for 'other adult contracts' and £252,000 for direct payments.
A further £44,000 increase for equipment was reported as well as a £28,000 rise for 'extra care'.
The local authority also saw a reduction of £582,000 in client contributions for residential and non-residential care.
Bosses said not increasing fees to care providers could cause suppliers to 'withdraw from the market'.
The report highlights residential care homes for older people has 'remained stable' despite the closure of a 37 bed facility.
Ian Campbell, an officer from the adults, health and wellbeing team at Doncaster Council, said: "Within the context of the on-going and challenging public sector budgetary situation, the council regard it as appropriate, necessary and prudent to reflect the unavoidable additional costs faced by the care home market.
During the process consideration was also given to occupancy levels within Doncaster’s existing residential provision. This continues to remain high, in the order of 18 per cent and the council does not wish to incentivise further provision as this would destabilise the local market.
"In addition the council’s strategy seeks to reduce care home placements by supporting more people at home which will potentially further increase vacancies.
"The council has worked closely with the CCG colleagues in considering the 2018/19 fee proposals, considering that some care packages are jointly funded. The proposals contained in this report enable to fulfil its Care Act responsibilities in relation to market stability and ensure adequate and appropriate service provision."
The decision was signed off in March earlier this year but was only made publicly available last week.