Savings Bond Alert #021

Thursday, June 15th, 2006
Categorized as: Savings Bond Alerts

May prices up 4.2% from a year ago

The Bureau of Labor Statistics announced this morning that prices were up 4.2% in May compared to a year ago. You may see lower percentages in the newspapers, but they refer to core inflation, which doesn’t include increases in food and energy prices. Core inflation is of interest to economists, but not us.

The Series I bond inflation component is based on the difference between the March and September levels of the total Consumer Price Index.

If prices rose no farther, in September the next I bond inflation component would be set at 2.70%. At the other extreme, if inflation for the six-month Mar-Sep period matches the rate of the first two months, April and May, the next I bond inflation component would be 8.11%.

Those are the extremes – the next I bond inflation component will almost certainly be between those two figures.

The rising levels of inflation are a concern to the Federal Reserve Board, which has the mandate to control inflation. They do so by raising interest rates. But higher interest rates tend to slow economic growth, so stocks markets have been falling recently. Although the drop in the US has been noticable, in other countries – especially developing economies – the fall has been drastic.

With markets falling, it’s been a good month to own Savings Bonds.

A sample of stories on the Savings Bond Advisor web site in the last month include:

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FDIC Insured Certificates of Deposit can pay 1 or 2% more than savings bonds when held for a similar length of time. See top CD Rates Below:

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June 1, 2010

After six years, over 400 posts, 3,680 real comments, and over 90,000 spam comments (thank you, Akismet, for making managing a blog with comments possible), I am closing public comments on I will contine to update the main articles on this site, but not the comments.

Virtually every question about Savings Bonds has been asked and answered on this site multiple times. Use the search feature (see the box in the gray area near the top of this page) or the detailed menu on the lower part of the home page to find the information you're looking for. If you have a copy of Savings Bond Advisor, you can ask me a question here.

Tom Adams

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