The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, CPI-U (also called ‘headline’ inflation) was up 1.7%.

The September report provided the final piece of data needed to learn the new inflation-adjusted interest rate paid by US Savings I Bonds. The new variable rate – which goes into effect on Nov. 1 – is based on non-seasonally adjusted inflation from March to September 2014.

In March, the CPI-U index stood at 236.293, rising to 238.031 in September. This is a six-month inflation rate of 0.74%, so the new variable rate (annualized) will be 1.48%. I have updated my Tracking Inflation and I Bonds page to reflect these new numbers.

All I Bond holders will eventually get this variable rate for six months, but the date it begins will vary based on the month the I Bonds were issued. Potential I Bond investors can decide to buy before Nov. 1, however, and lock in the current 1.84% variable rate for the first six months, along with the current 0.1% fixed rate for the life of the I Bond.

We don’t know what the Treasury will decide on the fixed rate in November. I have speculated that it will either hold at 0.1% or drop to 0.0%. An increase looks highly unlikely.

In addition, September’s inflation report set the 2015 cost-of-living increase for 70 million Social Security recipients at 1.7%, the third year in a row the increase will be less than 2%.

The inflation report

The BLS reported strong declines in the price of gasoline (-1.0%) and fuel oil (-2.1%), but these declines were balanced off by increases in the costs of food (0.3%), medical care commodities (0.5%) and shelter (0.3%).

The September report again reflects very mild inflation, which has increased just 1.7% over the last 12 months. This is below the Federal Reserve’s target number of 2.0% and danger level of 2.5%, although the Fed uses a different index.

‘Core inflation,’ which strips out food and energy, also rose 0.1% in September and was up 1.7% over the last 12 months.

This chart shows how inflation has eased since the spring of 2014, essentially rising 0.0% over the last three months: