Glossary
Calculations & Formulas
CPI Adjustment
An escalation tied to the Consumer Price Index rather than a fixed percentage. A common overcharge here is the landlord using the wrong CPI index (CPI-U versus CPI-W), the wrong base month, or ignoring a floor or ceiling the lease specifies.
Firm impact
CPI numbers are public, which makes a CPI adjustment one of the more verifiable escalation checks your firm can run, as long as you confirm which index and base month the lease specifies. Getting this wrong once carries forward into every future year's calculation.
How this gets abused
A lease specifies CPI-U for the local metro area with a 2% floor and 6% ceiling. The landlord instead applies the national CPI-U figure, which ran higher that year, and never applies the 6% ceiling that would have capped the increase.
Practitioner note
Pull the exact CPI series (index, geography, base month) named in the lease from the Bureau of Labor Statistics, and check for any stated floor or ceiling before accepting the calculated increase.
Related terms
FAQ
Questions about cpi adjustment
What CPI series do leases typically reference?
CPI-U (all urban consumers) is most common, often for a specific metro area rather than the national figure. The lease should name the exact series; if it doesn't, that ambiguity is worth raising with the client.
What is the most common CPI adjustment error?
Using the wrong index or geography, missing the correct base month, or ignoring a stated floor or ceiling. Any one of these changes the dollar amount of the escalation.
You know the term. Now check the math.
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