A binary event contract referring to US inflation needs more than a percentage threshold. The Bureau of Labor Statistics publishes multiple consumer-price indexes, adjustment bases and measures of change. A settlement definition has to identify the exact observation that answers the contractual question. US Bureau of Labor Statistics — CPI frequently asked questions ↗
Identify the population, geography and item coverage
The contract examples below are illustrative definitions, rather than claims that a particular product is currently listed or available to a reader.
BLS distinguishes CPI-U, CPI-W and the chained CPI, among other series. Its frequently asked questions identify the widely reported all-items CPI-U for the US city average and explain that both seasonally adjusted and unadjusted observations are published. An index level, one-month change and twelve-month change can all appear in CPI coverage. US Bureau of Labor Statistics — CPI frequently asked questions ↗
A rule referring only to CPI above 3% leaves important choices unresolved. Does it mean the all-items annual percentage change, an annualized short-term calculation or a different index? The answer should come from the contract definition before the release is observed.
BLS's guidance for escalation agreements recommends specifying enough parameters to identify a unique series, including the population, geography, items and adjustment basis. That guidance concerns escalation agreements, but the same identification problem is relevant when constructing a hypothetical event condition. US Bureau of Labor Statistics — How to Use the CPI for Escalation ↗
Match the percentage to its period
Consider an illustrative release showing a 0.3% seasonally adjusted monthly change and a 2.9% unadjusted twelve-month change. Those numbers answer different statistical questions. A rule settling on annual inflation above 3.0% would use the defined annual series; replacing it with a monthly number multiplied by twelve would change the calculation.
The same principle applies to the reference month. A release published in one month can report prices for the preceding month. A contract should state the observation period and identify the relevant release rather than assume those dates are interchangeable.
Decide how the release vintage is preserved
BLS explains that seasonally adjusted CPI series are revised annually as seasonal factors are updated, with revisions applied to the previous five years. It recommends unadjusted indexes for many escalation uses because the seasonally adjusted history can change. US Bureau of Labor Statistics — Using seasonally adjusted and unadjusted data ↗
For a hypothetical binary contract, the operator would therefore need to specify whether settlement uses a first release, a defined later vintage or a final determination under its rules. BLS's statistical revisions do not themselves rewrite an exchange's contract. The contract must say how the chosen data are used.
A reproducible settlement record can preserve the contract version, BLS series identifier or full title, reference month, relevant release time, observed value and applicable comparison. If a data feed disagrees with the source document, those fields make the discrepancy traceable.
The economic question may sound simple, but the settlement question is a specific data instruction. Identifying that instruction gives readers a way to check the outcome without relying on an inflation headline that may describe another series altogether.