June CPI-U Update

The CPI-U value for June rose again to 215.693 from May's value of 213.240.

The CPI-U for this semi-annual period used to adjust the I Bond rate has increased 1.4% so far, with 3 more monthly periods left to measure.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856	215.693

I Bonds

May CPI-U Update

The CPI-U value for May increased slightly over April's value of 213.240 to 213.856. The next I-bond rate is based on changes between March and September, so we still have a ways to go before making any predictions about the rate in November.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240	213.856

 

I-Bonds

April CPI-U Update

The April CPI-U value increased to 213.240. This marks the 4th consecutive period of inflation.

We can now begin tracking the CPI-U values for the November I bond rate, which we all hope is better than the current 0% rate.

Mar.	Apr.	May.	Jun.	Jul.	Aug.	Sep.
212.709	213.240

The November I bond inflation-linked rate is based on the change in CPI-U between March and September, which we will know by mid-October.

I Bonds & CPI-U

Is the I Bond rate really 0%?

There have been a few questions whether or not the new I Bond rate is really 0%, or if that means there is no difference in rates from last time. Unfortunately, it means the rate your I Bonds will be earning is in fact 0%. If your bond is earning 5% right now, it will be dropping to 0% in the coming months.

Existing I Bonds will adjust to the new rate some time between May and October depending on when you purchased the bond. On the first day of the bond's 6 month anniversary of purchase, the bond will drop down to earning 0% for 6 months. It is the equivalent of having cash in your pocket for 6 months.

Thinking of selling? You should remember that I Bonds MUST be held for at least one year. Additionally, there is a penalty of 3 months of interest for redeeming within 5 years. If you want to sell a bond that is less than 5 years from issue, wait until the bond is 3 months into the 0% rate. That way, when you redeem the bond, the penalty is the past three months of 0% interest, meaning you lose no value as part of the penalty.

I Bonds Rate: 0% May - November 2009

The new I bond rate for May to November 2009 will be 0.0%, as expected. The fixed rate will unfortunately drop to 0.1%.

All I bonds will drop to 0% as the deflation measured this period was significant enough to offset even the highest fixed rate ever issued. I bonds adjust rates every 6 months based on the issue month, so between now and November, bonds will drop down as they reach their 6 month mark.


I Bonds Rates

March CPI-U Value Released

The CPI-U value for March inched slightly higher to 212.709. This value is still well below September's 218.783, meaning that the I Bond rate change in May will track deflation rather than inflation.

The deflation was severe enough to ensure all issued I bonds will fall to 0% for the 6-month period starting in May. As a bond reaches the 6-month anniversary from its issue month, the rate will fall to zero.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193	212.709

February CPI-U update

The CPI-U value for February increased again to 212.193. This is still well below September's value of 218, so it is virtually impossible to have a positive value for the variable portion of I bonds for the next cycle.

Sept.	Oct.	Nov.	Dec.	Jan.	Feb.	Mar.
218.783	216.573	212.425	210.228	211.143	212.193

 

At this point, it is almost certain all I bonds will see a rate of 0% for the 6-month cycle starting on May 1. The deflation aspect of the formula is simply too large a negative value to produce a positive return. Since the composite rate cannot be negative, the rate will be 0%. As previously purchased bonds hit their 6-month anniversary, the rate will drop to zero. In order for a new I bond to offer a non-zero rate, the fixed rate would have to be over 6%, which is not very likely.

The highest fixed rate ever was 3.60%, so maybe we can see an adjustment to something close to that again. Even with a 0% rate for 6 months, a high fixed-rate I bond would be a good investment if held for a long period of time. The bonds with the 3.60% fixed rate were earning 9.4% in November 2005!

 

I Bond CPI-U Values