GroundRules
5 CFR 591.222: How does OPM use the expenditure weights to combine price indexes?
Where this section sits in the code
- Title 5—Administrative Personnel
- CHAPTER I—OFFICE OF PERSONNEL MANAGEMENT
- SUBCHAPTER B—CIVIL SERVICE REGULATIONS
- PART 591—ALLOWANCES AND DIFFERENTIALS
- Subpart B—Cost-of-Living Allowance and Post Differential—Nonforeign Areas
OPM uses a three-step process to combine price indexes.
(a) Step 1. For each DEC represented by one or more items for which OPM could make valid price comparisons (e.g., OPM was able to collect representative prices in both the COLA and DC areas), OPM computes the unweighted geometric average (the nth root of the product of n numbers) of the price index(es) of all item(s) representing the DEC.
(b) Step 2. OPM multiplies the price index for each DEC by its expenditure weight, sums the cross products, and divides by the sum of the weights used in the calculation. This produces a price index for the level of aggregation (e.g., PEG or sub-PEG) in which the DEC is categorized.
(c) Step 3. OPM repeats the process described in Step 2 at each level of aggregation within the PEG to produce a price index for the PEG, at the PEG level to produce an index for the MEG, and at the MEG level to produce the overall price index for the COLA area.
Collected 2026-08-27T02:23:53Z. Source file · JSON