Ibond Inflation Rate Calculation

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I-Bond Inflation Rate & Composite Rate Calculator

The set rate that stays with your bond for its 30-year life.
The CPI-U value from the start of the 6-month measurement period.
The CPI-U value from the end of the 6-month measurement period.

Results

Semiannual Inflation Rate: 0%

Variable Inflation Rate (Annualized): 0%

Composite Earnings Rate: 0%

How the I-Bond Inflation Rate is Calculated

Series I Savings Bonds (I-Bonds) are a unique investment designed to protect the purchasing power of your money from inflation. Unlike traditional savings accounts, the interest rate on an I-Bond consists of two parts: a Fixed Rate and a Variable Inflation Rate.

The Composite Rate Formula

To determine the final interest you earn (the Composite Rate), the U.S. Treasury uses a specific formula to combine the fixed and inflation components. This prevents "double-dipping" on interest while ensuring the rates are properly compounded:

Composite Rate = [Fixed Rate + (2 x Semiannual Inflation Rate) + (Fixed Rate x Semiannual Inflation Rate)]

The Role of the CPI-U

The variable portion of the rate is determined every six months based on changes in the Consumer Price Index for All Urban Consumers (CPI-U). The Treasury looks at the non-seasonally adjusted CPI-U values from specific months to set the rates for May and November.

  • Semiannual Inflation Rate: This is calculated by taking the percentage change from the starting CPI-U to the ending CPI-U over a 6-month period.
  • Fixed Rate: Set by the Treasury at the time of purchase and remains constant for the 30-year life of the bond.

Example Calculation

Suppose the Treasury sets a 1.30% fixed rate. If the CPI-U at the start of the measurement period was 307.789 and rose to 312.332 at the end:

  1. Semiannual Rate: (312.332 – 307.789) / 307.789 = 0.01476 (or 1.48% rounded).
  2. Annualized Inflation: 1.48% x 2 = 2.96%.
  3. Composite Calculation: 0.0130 + (2 x 0.01476) + (0.0130 x 0.01476) = 0.0427.
  4. Final Composite Rate: 4.27%.

Note: The composite rate can never go below zero, even during periods of deflation. The Treasury effectively "floors" the rate at 0% to protect your principal.

function calculateIBondRate() { // Get Input Values var fixedRateInput = document.getElementById("fixedRate").value; var oldCpiInput = document.getElementById("oldCpi").value; var newCpiInput = document.getElementById("newCpi").value; // Convert to numbers var fixedRateVal = parseFloat(fixedRateInput) / 100; var oldCpi = parseFloat(oldCpiInput); var newCpi = parseFloat(newCpiInput); // Validate inputs if (isNaN(fixedRateVal) || isNaN(oldCpi) || isNaN(newCpi) || oldCpi <= 0) { alert("Please enter valid positive numbers for all fields."); return; } // 1. Calculate Semiannual Inflation Rate // (New CPI – Old CPI) / Old CPI var semiInflationRate = (newCpi – oldCpi) / oldCpi; // 2. Calculate Annualized Inflation (just for display/context) var annualizedInflation = semiInflationRate * 2; // 3. Calculate Composite Rate // Formula: Fixed + (2 * semi) + (fixed * semi) var compositeRate = fixedRateVal + (2 * semiInflationRate) + (fixedRateVal * semiInflationRate); // Floor the composite rate at zero (Treasury rule) if (compositeRate < 0) { compositeRate = 0; } // Display results document.getElementById("semiInflation").innerText = (semiInflationRate * 100).toFixed(2); document.getElementById("annualInflation").innerText = (annualizedInflation * 100).toFixed(2); document.getElementById("compositeRateText").innerText = (compositeRate * 100).toFixed(2) + "%"; // Show the results box document.getElementById("ibond-results").style.display = "block"; }

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