Cost of Living Allowance (COLA) is a payment intended to mitigate a higher cost of living (food, housing, clothing and other basic necessities) in a given city or country.
Changes in cost of living can be measured in index form, with many countries using an inflation indicator, such as the consumer price index. This will then act as a yardstick to determine the level of a cost-of-living bonus or wage adjustment, sometimes known as a cost of living adjustment (COLA).