inflationindexation
Inflation indexation, or inflation indexing, is the automatic adjustment of monetary values to reflect changes in the price level, typically measured by a price index such as the consumer price index (CPI). The aim is to preserve purchasing power and reduce the need for frequent renegotiation of contracts, benefits, or obligations.
The adjustment is usually performed by multiplying the base value by the ratio of the current index
Advantages of indexation include maintaining real value in the face of rising prices, reducing the volatility
Measurement issues are central: the choice of index (for example, CPI variants), the treatment of hedonic changes,
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