Inflation rates are announced twice a year. A Semi-Annual Inflation Rate occurring Every May 1st and November 1st is the inflation rate that is altered by the Consumer Pricing Index (CPI). The CPI rate is based on the monthly fluctuation of prices paid by urban consumers for a representative of goods and services.
The Semi-Annual Inflation Rate on May 1st is measured by an analysis of the inflation over the preceding October through March. The November 1st rate is a measurement of inflation over the preceding April through September.
This Semi-Annual Inflation Rate is important to follow if you have diversified your financial holdings to include US Savings Bonds. The semi-annual announcement directly influences the amount of money generated as interest on bonds that have a composite interest rate.
Although not all US Savings Bonds are influenced by the Semi-Annual Inflation Rate, the I Series Bond is. The I Series Savings Bond generates a yield based on a fixed rate of return in conjunction with a fluctuating interest rate influenced by the Semi-Annual Inflation Rate.
The CPI is almost like a crystal ball for the Semi-Annual Inflation Rate announcement and can be mathematically used calculated the rate of return before it is announced by the Federal Government. Every month the government releases the CPI-U inflation rate. But if you lack the math skills, just know that your initial investment will not lose money – some rate of return is guaranteed and it will be announced two times a year.
Before purchasing any US Savings Bonds, it is imperative to educate yourself on how your rate of return is being established. Whether your bonds will pay a fixed rate of return or change semiannually depends on the type of bond that is purchased.