Glossary
Not seasonally adjusted (NSA)
A not-seasonally-adjusted index reports the actual measured price change, including regular seasonal swings. Price escalation clauses use NSA data because the seasonally adjusted version is a modelled estimate that agencies revise and that two parties cannot independently reproduce.
Also called: NSA, unadjusted index, not seasonally adjusted.
Statistical agencies publish most series in two forms. The seasonally
adjusted (SA) form removes recurring calendar patterns to make the
underlying trend easier to read. The NSA form is the raw number.
Contracts should cite NSA for three reasons. SA values are re-estimated as
more data arrives, so the number can change months later. The adjustment
model is the agency's, not something a counterparty can verify. And a
clause that already uses an averaging window
or compares the same month year over year has handled seasonality itself.
Example: heating fuel prices rise every winter. An SA series smooths that
away; an NSA series shows it. A clause comparing December to the prior
December on NSA data captures the real cost the buyer faced.
See publication lag and
PPI.
Related terms
The Producer Price Index measures the average change over time in the selling prices domestic producers receive for their output. It is the index most business-to-business escalation clauses use, because it tracks wholesale input costs rather than retail prices.
Publication lag is the gap between the month an index measures and the date the statistical agency releases that value. A clause has to say whether it uses the preliminary figure available at adjustment time or waits for the final, revised one.
The reference period is the year a statistical agency sets an index equal to 100, so all other values read as a percentage of it. It is a property of the index itself, not of any contract, and it is not the same as a clause's base period.
A successor series is the index a clause switches to when its named series is discontinued or restructured by the statistical agency. A well-drafted clause names the successor, or a method for choosing one, in advance.
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