Savings Bond Alert #023
Wednesday, August 16th, 2006
Categorized as: Savings Bond Alerts
CPI up 4.1%; new Savings Bond investments hit 20-year low
The Bureau of Labor Statistics announced this morning that the Consumer Price Index (CPI) shows July’s prices were up 4.1% from a year ago. The Series I Savings Bond inflation component is based on the difference between the CPI in March and September.
With just August and September’s CPI yet to be determined, the next I bond inflation component looks like it will be one of the highest on record. If it exceeds 3.81%, which now appears very likely, it will be the second-highest I bond inflation component ever. To be the highest ever it will have to exceed last year’s 5.69%, which is still possible but is becoming less likely.
This will put the rates for new I bonds in the 5% to 6.5% range. Rates for older I bonds would vary from 5% to 9%, depending on issue date.
Meanwhile, new investments in Savings Bonds hit a 20-year low in July, according to the US Treasury. This wild swing from the investment rate six months ago in January – which hit a 10-year high – can be attributed to the wild swings in Series I bond interest rates. Those swings have been caused by the unusual pacing of inflation over the last year.
TreasuryDirect implemented a number of security enhancements during the last month and the government’s Savings Bond web site has been upgraded and enhanced.
Other stories on the Savings Bond Advisor web site in the last month include: