Glossary
Reference period
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.
Also called: index base year, base year, 1982=100.
When BLS says a producer price index has a 1982 reference period, a
reading of 250 means prices are 250 percent of their 1982 level. Agencies
occasionally rebase a series, for example from 1982=100 to 2023=100, which
changes every printed value but not the percentage change between any two
dates.
This matters for contracts because a clause's ratio is computed from
change, not level. A rebasing from 1982=100 to 2023=100 leaves a
year-over-year escalation unchanged. Confusing the reference period with
the base period leads people to think a rebasing
broke their formula when it did not.
If a clause quotes a specific index value as its base, record the
reference period alongside it so a later rebasing can be reconciled.
See CPI vs PPI and
successor series.
Related terms
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.
A true-up is a later correction to a price adjustment that was calculated from a preliminary index value, once the final revised value is published. The difference is billed or credited in a subsequent invoice.
WPU and PCU are the two BLS Producer Price Index series-code families. WPU codes track a commodity by what it is; PCU codes track the output prices of an industry defined by NAICS code. Many materials appear in both, at different values.
An averaging window is the number of consecutive published index values a price escalation clause averages before using the result in its formula. A 3-month window smooths a single volatile month; a 1-month window tracks the latest value exactly.
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