Cost of living

Differences in the cost of living between locations can be measured in terms of purchasing power parity rates.

[2] Cost of living pressures may lead to household energy insecurity or fuel poverty as well as housing stress.

Differences in cost of living between locations can be measured in terms of purchasing power parity rates.

In this latter case, the expatriate employee will likely see only the discretionary income part of their salary indexed by a differential CPI between the new and old employment locations, leaving the non-discretionary part of the salary (e.g., mortgage payments, insurance, car payments) unmodified.

Annual escalation clauses in employment contracts can specify retroactive or future percentage increases in worker pay which are not tied to any index.

When cost-of-living adjustments, negotiated wage settlements and budgetary increases exceed CPI, media reports frequently compare the two without consideration of the pertinent tax code.

Consequently, the COLA will necessarily have to exceed the CPI inflation rate to maintain purchasing power.

[6] The Economist Intelligence Unit produces a semi-annual (twice yearly) worldwide cost of living survey that compares more than 400 individual prices across 160 products and services.

They include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The survey itself is an internet tool designed to calculate cost-of-living allowances and build compensation packages for corporate executives maintaining a western lifestyle.

Such adjustments are intended to offset changes in welfare due to geographic differences in the cost of living.