The U.S. Treasury today finally announced a calculated CPI index for October – 325.604 – which equates to monthly inflation of 0.25%. The presumed annual rate ticked higher from 3.0% in September to 3.1% in October.
This unprecedented calculation was necessary because no inflation data were collected in October during the 43-day government shutdown. Without that data, Treasury had to determine a number so that daily inflation indexes could be set for Treasury Inflation-Protected Securities during the month of December.
If the CPI for a particular month is not reported by the last day of the following month, we will announce an index number based on the last available twelve-month change in the CPI. We will base our calculations of our payment obligations that rely on that month’s CPI on the index number we announce.
For example, if the CPI for month M is not reported timely, the formula for calculating the index number to be used is:
If it is necessary to use these formulas to calculate an index number, we will use that number for all subsequent calculations that rely on the month’s index number. We will not replace it with the actual CPI when it is reported, except for use in the above formulas. If it becomes necessary to use the above formulas to derive an index number, we will use the last CPI that has been reported to calculate CPI numbers for months for which the CPI has not been reported timely.
What this all means, basically, is that the Treasury looked back at the average inflation rate of the last 12 months (September 2024 to September 2025) and used the formula to remove any effect of compounding. That calculation resulted in an inflation index of 325.604 and a monthly increase of 0.25%.
October’s inflation index will forever be 325.604, whether right or wrong. I’d guess the 0.25% monthly increase was close, but we will never know for sure. The November inflation report will arrive on December 18.
This calculation was crucial because inflation in October sets inflation indexes for TIPS in the month of December. Here are the December Inflation Ratios for all TIPS, which were released immediately after the calculated October CPI was announced.
As future inflation data are collected, the missing October data will become less crucial as new reports reflect price reality. There won’t be any meaningful effect on I Bonds, because the October number is the first of a 6-month string that will determine the I Bonds next variable rate, to be reset May 1. That will autocorrect.
One interesting factor for TIPS held in a traditional retirement account, however, is that the December numbers are highly likely slightly off, but required minimum distributions will be set by the value of TIPS on December 31. I’d contend this isn’t a huge deal, but some of my more OCD readers will be disturbed.
I am glad this saga is over so I can stop checking the Treasury website five times a day to see if the official October number was released.
Enjoy your Thanksgiving everyone!
—————————
Donate? This site is free and I plan to keep it that way. Some readers have suggested having a way to contribute. I would welcome donations. Any amount, or skip it, your choice. This is completely optional.
Follow Tipswatch on X for updates on daily Treasury auctions and real yield trends (when I am not traveling).
Feel free to post comments or questions below. If it is your first-ever comment, it will have to wait for moderation. After that, your comments will automatically appear. Please stay on topic and avoid political tirades.NOTE: Comment threads can only be three responses deep. If you see that you cannot respond, create a new comment and reference the topic.
David Enna is a financial journalist, not a financial adviser. He is not selling or profiting from any investment discussed. I Bonds and TIPS are not “get rich” investments; they are best used for capital preservation and inflation protection. They can be purchased through the Treasury or other providers without fees, commissions or carrying charges. Please do your own research before investing.
About Tipswatch
Author of Tipswatch.com blog, David Enna is a long-time journalist based in Charlotte, N.C. A past winner of two Society of American Business Editors and Writers awards, he has written on real estate and home finance, and was a founding editor of The Charlotte Observer’s website.
