June & July CPI-U Increases

The CPI-U recovered some ground lost in June by climbing to 225.922 in July. The July value is still lower than the May value, but is higher than the March value, which is what the next I Bond rate will be based on. The March to July change in CPI-U is 1.1%. Given no increase in August and September and a continued 0% fixed rate, a new I Bond composite rate would translate to 2.2%. The rate will not be known until all the semi-annual CPI-U values are known and the new fixed rate is announced November 1.

 

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964	225.722	225.922

End of Paper Bonds from Institutions

The US Treasury announced today that paper savings bonds will no longer be sold at financial institutions beginning January 1, 2012. Although paper bonds will no longer be available through institutions, they will still be available when purchased using your tax refund or as a replacement for reissued, lost, stolen, or destroyed paper bonds.

The move to cut paper bonds is said to save over $70 million in the first five years. All bond purchases from consumers will now be through TreasuryDirect.

There is no indication how this change will impact the current purchasing limit of $5,000 electronic and $5,000 paper bonds per year.

Treasury to End Over-the-Counter Sales of Paper U.S. Savings Bonds; Action will save $70 million over first five years

Banks will no longer sell Savings Bonds

May CPI-U

The May CPI-U value rose to 225.964. The November I Bond rate will be based on the change from the March to September rate.

March	April	May	June	July	Aug.	Sept.
223.467	224.906	225.964

CPI-U.info: CPI-U value for May 2011

May 2011 I Bond Rate Released

The I Bond Rate for May 2011 will be 4.60%. The new composite rate includes the previously known 2.60% CPI-U change and the newly announced 0% fixed rate.

Fixed Rate: 0.00%
CPI-U Rate: 2.60%
Variable Rate: 4.60%
Composite Rate: 4.60%

TreasuryDirect Press Release: http://www.treasurydirect.gov/news/pressroom/pressroom_comeeandi0511.htm

What will the next I Bond rate be? May 2011

May I Bond Rate

The semiannual inflation change period for the May I bond is now complete, meaning we can calculate when the May 2011 rate will be based on different fixed rates.

The CPI-U change increased by 2.3% from September 2010’s value of 218.439 and March 2011’s value of 223.467. Based on this, the composite rate would be between 4.60% and 6.03%, depending on the announced fixed rate.

Theoretical Fixed Rate	Composite Rate
0.00%	4.60%
0.10%	4.70%
0.20%	4.80%
0.30%	4.91%
0.40%	5.01%
0.50%	5.11%
0.60%	5.21%
0.70%	5.32%
0.80%	5.42%
0.90%	5.52%
1.00%	5.62%
1.10%	5.62%
1.20%	5.83%
1.30%	5.93%
1.40%	6.03%

Buying an I bond before May 1st will result in a 0.74% composite rate for 6 months, and then a 4.60% for the next 6 month period beginning in October.

Since the CPI-U change alone results in a very attractive rate in today’s environment, I doubt the fixed rate will be higher in May than it is today.

March 2011 CPI-U Released

The CPI-U value for March increased again to 223.467, up from February’s value of 221.309. March is also the final month in the semi-annual inflation period used for the May I Bond rate. The resulting change between September’s value of 218.439 and March’s 223.467 results in a 2.3% CPI-U increase.

The inflation linked rate of the May I Bond will be 2.3%. The fixed portion will not be known until the new composite rate is announced Monday, May 2nd.

 

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179	220.223	221.309	223.467

March 2011 CPI-U details

February 2011 CPI-U Released

CPI-U for February increased again to 221.309, up from January’s value of 220.223. With one month remaining before the inflation-linked portion of the May I Bond is known, the increase is already higher than it was in the previous semi-annual change used for the November I Bond rate.

 

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.439	218.711	218.803	219.179	220.223	221.309

 

CPI-U.info: CPI-U value for February 2011