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In Chile, most of prices are measured in the local currency, the peso (currency code CLP). However, there are two other units of account. These are the UF and the UTM. These keep track of the real value of the currency, and are updated daily based on past inflation. For instance, the 16th of March of 2009, the UF was equivalent to CLP$21,000.46, whereas today (10th of July of 2017), its value is CLP\$26,666.19. The difference reflects the effect of inflation between the two dates.

It serves several purposes. For example, it eases the denomination of assets paying real interest rates (e.g. UF + 2%); it is the standard used to price real estate; and it is the denomination of several state fines and minor taxes (e.g. parking fines). (It can also lead to hysteresis in inflation, when used to price wages).

Is there any other country using such inflation-adjusted units of account? Or perhaps a country that used it in the past? I have never seen or read anything about this. I want to know more about the inspiration and usages of such monetary tools.

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  • $\begingroup$ How exactly is this different from observing an inflation index? $\endgroup$ – Giskard Jul 10 '17 at 15:04
  • $\begingroup$ Do you know examples of units of account that are linked to an inflation index? $\endgroup$ – luchonacho Sep 25 '17 at 7:39
  • $\begingroup$ Aren't most CPI-based inflation indexes calculated by observing the price of the representative consumer's basket? That basket seems to be a unit of account. $\endgroup$ – Giskard Sep 25 '17 at 7:43

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