Financial Assurance Annual Inflation Increase

Remediation sites requiring financial assurance must apply annual inflation increases to their cost estimates per 6 NYCRR Part 373-2.8. The Department of Environmental Conservation uses annual Implicit Price Deflators provided by the Bureau of Economic Analysis to calculate annual inflation increase rates to cost estimates. The current year's inflation increase is provided above. Additionally, the instructions on this page are provided to describe how the inflation increase is calculated.

CALCULATING ANNUAL INFLATION INCREASES:

Implicit Price Deflators (IPDs) for Gross Domestic Product (GDP) are used to calculate the annual inflation adjustments to cost estimates. Follow these steps to calculate the yearly inflation adjustment:

• Visit the Bureau of Economic Analysis website (leaves DEC website). Under the Tools dropdown, select Interactive Data. Under National Data, select Gross Domestic product and Personal Income and then Interactive Data Tables.
• Click on Section 1 and then select Table 1.1.9 Implicit Price Deflators for Gross Domestic Product. This table is updated monthly; however, annual numbers are used to calculate the inflation increase.
• Using Implicit Price Deflators for the 2022 inflation increase: In the upper right corner of the page, select "Modify." In the pop-up, select 2021 as the First Year and 2022 as the Last Year. Under Series, choose Annual. Then, click Refresh Table.
• The inflation adjustment = 2023 IPD (line 1) / 2022 IPD or 122.262/117.973 = 1.036. This would be applied to your 2023 cost estimate to arrive at your 2024 cost estimate.

**General Rule: Multiply the Inflation Increase number by the company's Second Year Cost Estimate to arrive at the "Year to Calculate" Cost Estimate.

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