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What is Cost Of Living Adjustment?

Definition of Cost Of Living Adjustment

The Cost Of Living Adjustment is a periodic increase in salaries and benefits to counteract the negative effects of inflation, and ensure that the purchasing power of a given amount of money does not decrease beyond a acceptable parameter; normally in order to maintain the current average quality of life. COLAs are usually equal to the percentage increase of the consumer price index (CPI) for urban workers over a given time period.
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