§ 591.226 How does OPM apply the CPIs?

5 CFR 591.226(a)(a) OPM uses a three-step process to adjust price indexes by relative annual or biennial changes in the CPIs. For steps 1 and 2, OPM computes the annual change by dividing the CPI from 1 year after the survey by the CPI from the time of the survey. OPM computes the biennial change by dividing the CPI from 2 years after the survey by the CPI from the time of the survey.

5 CFR 591.226(a)(1)(1) Step 1. OPM computes the annual or biennial CPI change for the COLA area.

5 CFR 591.226(a)(2)(2) Step 2. OPM computes the annual or biennial CPI change for the DC area.

5 CFR 591.226(a)(3)(3) Step 3. OPM multiplies the COLA area price index from the last survey by the COLA area CPI change computed in step 1 divided by the DC area CPI change computed in step 2. The adjusted price index is rounded to the second decimal place.

5 CFR 591.226(b)(b) Example: Computation: 117.33 × (174.7/172.2)/(161.9/159.7) = 117.4159, which would round to 117.42.