How to calculate contract escalation with CPI – formula and example

The formula in one line

The base formula is: new amount = base amount × (comparison index / base index). The difference between the new amount and the amount actually invoiced is the potentially missed escalation.

• Base amount: the price tied to the clause’s base index.
• Base index: the official index value for the agreed base period.
• Comparison index: the value for the period specified in the clause.
• Effective date: the month when the new price may actually start.

Worked CPI example

Assume a monthly amount of SEK 40,000, a base index of 100.65 and a comparison index of 125.56. The factor is 125.56 / 100.65 = 1.2475. The indexed monthly amount is approximately SEK 49,900 – a difference of about SEK 9,900 per month.

A real claim must also reflect caps, floors, index participation, notice rules and the effective date.

Common errors that change the answer

The most common mistake is using the wrong month or confusing the index publication month with the price adjustment’s effective month.

• Do not start from today’s amount if the clause specifies another base amount.
• Treat “75% of the index change” as participation, not a 75% cap.
• Check whether the base is fixed or each annual adjustment is chained.
• Do not assume retroactivity before reviewing the notice rule.

How Indexerly handles it

Indexerly uses AI to read the clause and propose structured fields. You verify them against the exact clause quote. A deterministic engine then calculates the amount from official index values – AI never calculates the money.