An indexed supplier increase needs the right base and adjustment formula
The supplier cites an index as the explanation
A supplier says its mid-contract increase follows an index. That gives you a calculation to examine, not an automatic answer about the price payable. Obtain the actual adjustment provision and the supplier's working. A headline inflation figure, an industry index and a contract-specific formula may measure different things. Ask for advice if the right to adjust or the wording is disputed.
Identify the agreed calculation inputs
Record the named index series, base period, comparison period and relevant price component. Check for any stated weighting, cap, floor or review timing without assuming such features exist. If the terms use an unclear reference, seek clarification rather than choosing a replacement yourself. Keep the source publication or data reference that the supplier says supports each input.
Use the contract rather than a general percentage
Business.gov.au recommends setting out fee calculations clearly. Apply that discipline to the explanation requested here. A supplier may have calculated a mathematically correct percentage using the wrong period or applied it to an amount the formula does not cover. Conversely, a rise larger than expected is not proof of an error. The actual wording and inputs need checking.
Consider a hypothetical mixed price
Imagine an agreement that adjusts only a specified material component, while the supplier applies the percentage to the entire package including an unchanged service component. Ask whether that treatment matches the clause. The example identifies a question, not a conclusion about your contract. Have an adviser assess ambiguous terms before treating the recalculation as the amount legally due.
Keep arithmetic and entitlement separate
Prepare a side-by-side calculation showing the supplier's method and the particular input you query. Do not silently change multiple assumptions until a preferred answer appears. Preserve earlier versions and obtain a competent check where the formula is complex. Ask separately how to handle any invoice or notice requirement while the calculation is being discussed; informal questions may not replace required steps.
Record the agreed basis for the next review
If the issue is resolved, retain the accepted inputs, formula and applicable period with the purchasing records. Make clear whether the outcome applies only to the disputed adjustment or also clarifies future reviews. A repeatable calculation reduces confusion, but it does not establish a right to pass the increase to your customer or remove the need to reassess the project's remaining costs.