Cost of Living

Discipline: Economics

The cost of goods and services that a family needs to buy in order to maintain a certain standard of living.

the cost of living is usually gauged by the "Consumer price index (cpi)", from which a cost-of-living index can be derived. Cost-of-living indexes estimates the changes in the cost of living. The cost-of-living index also serves as the basis for the cost-of-living allowance (COLA), or a cost-of-living adjustment, which is used to adjust wages and salaries to the new living conditions. These adjustments are usually made annually, but it is also possible to tie an employee's payroll to the cost-of-living index, and make each payment in accordance with it.

Also see: consumer price index (cpi)

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