Inflasjonsjusteringen

Inflasjonsjusteringen, often translated as inflation adjustment or indexation, is a process used to account for the general increase in prices and fall in the purchasing value of money over time. This adjustment is applied to various economic variables, such as wages, salaries, pensions, social benefits, taxes, and financial contracts, to maintain their real value. Without inflation adjustment, the purchasing power of fixed nominal amounts would erode as inflation rises.

The primary mechanism for inflation adjustment is typically an index, most commonly the Consumer Price Index (CPI). The CPI measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. When the CPI increases, it indicates that inflation has occurred, and adjustments are made accordingly. For example, if wages are inflation-adjusted, they are increased by a percentage corresponding to the rate of inflation to ensure that workers can purchase the same quantity of goods and services as before.

In many countries, inflation adjustment is a legally mandated feature of certain payments, such as pensions and social security benefits, to protect the living standards of recipients. It is also used in tax systems, where tax brackets and certain deductions may be adjusted annually to prevent "bracket creep," where inflation pushes individuals into higher tax brackets even if their real income has not increased. Financial instruments like bonds may also feature inflation-linked coupons or principal payments. The goal of inflation adjustment is to maintain fairness and predictability in economic relationships by preserving the real value of monetary amounts over time.