A Cost of Living Adjustment (COLA) is an increase to wages, benefits, or budgets designed to maintain purchasing power as prices rise due to inflation. COLAs are often tied to measures like the Consumer Price Index (CPI). Collective agreements may include COLA provisions ensuring workers' real wages keep pace with inflation. Municipal budgets may include COLA increases to maintain service levels as costs rise. During high inflation periods, COLA discussions become particularly important—workers seek protection against eroding purchasing power while employers face cost pressures. COLAs help maintain fairness but add to budget pressures when inflation is elevated.