Price Cap Calculator

Formula

The formula to calculate the Price Cap (PC) is:

\[ PC = CPI - X \]

Where:

\(PC\) is the Price Cap (%)
\(CPI\) is the inflation rate (%)
\(X\) is the expected efficiency savings (%)

Price Cap Definition

The Price Cap (PC) is the maximum allowable price increase, calculated by subtracting the expected efficiency savings from the inflation rate. This helps regulate prices and ensure they remain fair and reasonable.

Example Calculation

Let's assume the following values:

Inflation Rate (CPI) = 3%
Expected Efficiency Savings (X) = 1%

Using the formula to calculate the Price Cap (PC):

\[ PC = 3 - 1 = 2 \]

The Price Cap (PC) is 2%.