How to structure this clause
- Identify the exact product category. Wireless devices, computers, audio and video equipment, and small appliances each have their own series. There is no single "consumer electronics" index.
- Pick the matching BLS output series. Wireless devices PCU334220334220, computers PCU334111334111, audio and video PCU334310334310, small appliances PCU335210335210. Use the finished-product code, not the telephone apparatus code or a blended one.
- Use a composite only for custom builds. For contract manufacturing where the buyer specifies the bill of materials, build a composite from the semiconductor guide, a regional assembly-labor wage index, and the finished-product series as a sanity check.
- Add a cap and a floor. This category can move in both directions. A floor protects the supplier from further declines. A cap protects the buyer from a component-shortage spike.
- Do not blend categories. Wireless devices, computers, and small appliances do not move together. Keep each on its own series and its own clause so the driver of any adjustment stays visible.
Real indices exist, one per product category
Unlike several verticals covered elsewhere on this site, consumer electronics has direct, real BLS output indices for the finished products themselves, not just their inputs. There is no single "consumer electronics" index, though. Each product category has its own series.
| Product category | Benchmark | Note |
|---|---|---|
| Wireless devices | PCU334220334220 (Broadcast and wireless communications equipment mfg) | Check the BLS industry scope for your product |
| Telephone equipment | PCU334210334210 (Telephone apparatus mfg) | A separate industry from the wireless series |
| Computers | PCU334111334111 (Electronic Computer Mfg) | |
| Audio and video equipment | PCU334310334310 | |
| Small electrical appliances | PCU335210335210 |
Pick the code that matches what is actually being bought. Two series can look right for the same product. Before you pick one, read the BLS industry scope for it and confirm it covers what you buy. A series that does not cover your product will drift from your real price.
These are domestic producer indices
The PPI measures prices received by producers in the United States. Much consumer electronics is made abroad. If your supplier builds overseas, a US output index shows US makers' prices, not your supplier's costs. Say so in the clause, or pair the series with a component or freight index.
When to use a direct index versus a composite
If the contract buys a finished, catalog-standard product, index directly to the matching series above. If the contract is for a custom-assembled device, contract manufacturing where the buyer specifies the bill of materials, build a composite instead: the semiconductor guide for the chips, a regional assembly-labor wage index, and the relevant finished-product series above as a sanity check against the composite total.
A worked example
This is a teaching example with round numbers, not market data. Say a wireless device supply contract is indexed to PCU334220334220, and the index falls 6% between the base month and a review month. On a $2,000,000 annual purchase commitment, that is a $120,000 reduction, assuming the clause adjusts in both directions. A clause with no floor protecting the supplier from further declines, or no cap protecting the buyer from a component shortage spike, leaves one side exposed to a swing in either direction.
Don't blend categories that move differently
Wireless devices, computers, and small appliances do not move together. Component shortages hit wireless devices and computers hard while barely touching small appliances, and the reverse happens with commodity metal cost spikes. Blending them into one index, or one shared escalation clause, hides which category actually drove the cost change.