How are price adjustments calculated according to indexation?

Price adjustments calculated according to indexation involve utilizing an index that measures the relative change in prices over time, typically setting a base year value at 100. This approach helps in adjusting prices in a consistent manner by referencing a predetermined standard.

In this context, the index serves as a benchmark, making it easier to track how prices fluctuate compared to that base year. For example, if the index value rises to 110, it indicates that prices have increased by 10% since the base year. This method provides a structured way to apply price changes that reflect actual market conditions over a given period, allowing for fair and equitable adjustments in procurement contracts or supply agreements.

Other methods, like averaging costs from multiple suppliers or using percentage increases, do not provide the same standardized approach to measuring price changes, making option C the most relevant for calculating price adjustments through indexation.