Homonym: COLA (Soda)
COLA, or Cost of Living Adjustment, is an increase in income that helps individuals keep up with rising prices. It is often applied to salaries, pensions, and social security benefits to ensure that purchasing power remains stable over time. COLA adjustments are typically based on inflation rates, which measure how much prices for goods and services increase.
Employers and government agencies use various indexes, such as the Consumer Price Index (CPI), to determine the appropriate COLA. By implementing these adjustments, they aim to protect individuals from the negative effects of inflation, ensuring that their earnings can cover essential expenses like housing, food, and healthcare.