The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, ‘headline’ inflation increased 1.4%.
Non-seasonally adjusted inflation – which is used to adjust principal balances on TIPS and set future interest rates on I Bonds – rose 0.2% in January, reaching an inflation index of 236.916. The I Bond variable rate will be set based on inflation from September 2015 to March 2016. So far, with two months remaining, inflation has been running -0.43%, setting up the possibility of a negative composite rate for six months after the next adjustment.
I have updated my ‘Tracking Inflation and I Bonds‘ page with these new numbers.
Also, I posted a more thorough analysis on SeekingAlpha.com:
January Inflation Report: A Glimmer Of Hope For TIPS And I Bonds?
Silver, who knows what the Treasury is thinking. But I suspect that if they looked at a negative variable rate on the I Bond, they wouldn’t dare drop the fixed rate down from 0.1%.
Wouldn’t the Feds what to keep it positive it some way so as to attract some buyers? Do they really want another 6 months of no one buying these bonds?!