How to Protect Your Money From Inflation (Official Data)

Intro

These are seven places to keep your money, ranked by how well they hold up against inflation. Using only official data. Because prices are climbing again. The Bureau of Labor Statistics says they rose 3.7% over the last twelve months.

Gasoline alone is up 34.2%. Last month, the Federal Reserve raised interest rates. In its own words: inflation remains elevated. We start with the regular savings account, and we finish with the one the Treasury says is set up to protect you against inflation.

Every number is on screen, with its source. Let's follow the money. Here's the line itself, from the Labor Department's release on October fourteenth: over the last twelve months, the all items index increased 3.7%. And the Fed's statement of September sixteenth says it in three words: inflation remains elevated.

So it raised the target range for its key rate by a quarter point, to three and three quarters to 4%.

Your Number

Inflation in America is 3.7%. But that's an average, and your own basket is different. The BLS breaks it down. Gasoline: up 34.2% in a year.

Airline fares: up 22.4. All items: 3.7. And food at home, your groceries: just 1.8. And one big bill actually went down.

Car insurance fell 5% over the year. So if you drive a lot, this inflation hit you harder than the headline. If you mostly cook at home, softer. Zoom out further.

By the official index, what cost $100 in January 2020 costs about $130 and sixty cents now. Up about 31%, by our math. The Fed's own favorite gauge, the PCE price index, tells a similar story: up 3.4% in the year to August. And one odd detail: two months of the official record are blank.

The BLS says October and November 2025 data are not available, because of the 2025 lapse in appropriations. And paychecks didn't keep up. From September 2025 to September 2026, the BLS says, real average hourly earnings decreased 0.7%. So the real question is what your money earns while prices do this.

FINRA, which oversees brokers, puts the rule simply: the real rate of return is the rate of return minus the rate of inflation. So let's rank seven places for your money by that rule. From the one that follows inflation least, to the one built to follow it most. If you like seeing the real paperwork behind your money, subscribe.

That's all we do here.

Savings Account

Number seven: the regular savings account. The national average savings rate in America is 0.37%, the FDIC says. That's the FDIC's own table, as of September twenty-first: savings, 0.37%. Meet Maya.

She keeps $10,000 in a regular savings account. At the national rate, a year later she has $10,037. $37 of interest. But with prices up 3.7%, she now needs $10,370 to buy what 10,000 bought a year ago.

In today's dollars, her savings lost about $321 of buying power. Without spending a cent. Prices: 3.7%. The national savings rate: 0.37.

Ten times lower. A real return of about minus 3.3%. Its one strength: safety. In the FDIC's words, your deposits are automatically insured to at least $250,000 at each FDIC-insured bank.

12-Month CD

Number six: the twelve-month CD. A certificate of deposit locks your money in for a set time, and the FDIC's national average for twelve months is 1.73%. Better than savings. Still below inflation.

A real return of about minus 2%, by our math. And locking up longer doesn't pay more right now. The FDIC's national average is 1.61% for a two-year CD, and 1.38 for five years.

Money Market Funds

Number five: money market funds. Money market funds are mutual funds, and they held $8.4 trillion in net assets in August, the SEC's statistics show. After fees, government money market funds yielded 3.53% in August, on average. Close to inflation.

Just below it. And the pile keeps growing: up 11.3% in the year to July, the SEC's dashboard shows. And the SEC's own Investor.gov is clear: money invested in a money market fund is not guaranteed by the FDIC like bank accounts are. So there's a risk you may lose some or all of it.

The next two ride a different wave: short-term rates, set at the U.S. government's own auctions. The Fed's key rate is now three and three quarters to 4%. Treasury sells thirteen-week bills at auction every week.

And floating rate notes reset with that bill. Here's how both work.

Treasury Bills

Number four: Treasury bills. Treasury bills are short-term loans to the U.S. government, and you can buy them for as little as $100. TreasuryDirect explains the deal: bills are sold at a discount or at par.

When the bill matures, you're paid its face value. The difference is your interest. Terms run from four weeks to fifty-two weeks, with auctions every week for most of them. Here's the official result of the October thirteenth auction for the thirteen-week bill: an investment rate of 4.185%.

And demand was enormous. Bidders offered about $260 billion, for about $95 billion of bills on sale. 4.185, against prices up 3.7. Right now, the bill rate sits above the latest inflation number.

More than ten times the national savings rate, by our math. The catches. Federal tax is due on the interest, though there's no state or local tax. And each bill's rate is fixed at its own auction.

When it matures, the next one can pay more, or less. One more rule: buy through TreasuryDirect, and you must hold the bill there forty-five days before selling or transferring it.

Floating Rate Notes

Number three: floating rate notes. Floating rate notes are two-year Treasury securities whose interest rate floats over time, and they pay interest four times a year. The rate is tied to the thirteen-week Treasury bill, auctioned every week. So, in TreasuryDirect's words, the index rate of an FRN is reset every week.

On top of that index sits a spread, fixed at the first auction for the life of the note. For the notes first sold on July twenty-ninth, it's 0.05%. So when the thirteen-week bill rate rises, the note's rate rises with it at the next weekly reset. When it falls, so does the note.

Minimum: $100. Federal tax applies. State and local taxes don't.

I Bonds

Number two: I bonds. Series I savings bonds come from the U.S. Treasury, and part of their rate follows inflation. For I bonds issued from May first to October thirty-first, 2026, the rate is 4.26%.

That includes a fixed rate of 0.90%. The fixed part never changes for the life of the bond. The inflation part, 1.67% for six months, is set every May first and November first, from the CPI. Together, by the Treasury's own formula: 4.26% a year.

So the next rate is announced November first. They start at $25, to the penny. Then the rules. One Social Security number can buy up to $10,000 in electronic I bonds each calendar year.

You can't cash them for twelve months. And if you cash in before five years, you lose the last three months of interest. And one old trick is gone. As of January first, 2025, you can no longer buy paper I bonds with your tax refund.

The interest is subject to federal income tax, but not state or local income tax. And you choose whether to report it each year, or when you cash the bond.

TIPS

Number one: TIPS. TIPS are Treasury bonds whose principal moves with inflation. The name stands for Treasury Inflation-Protected Securities. And TreasuryDirect puts it in one line: as the name implies, TIPS are set up to protect you against inflation.

Here's the mechanism. The Treasury adjusts the principal of your TIPS using the Consumer Price Index. It pays a fixed rate every six months, on that adjusted principal, so the payment moves too. And at maturity, you get the inflation-adjusted principal or the original, whichever is greater.

In the Treasury's words: you never get less than the original principal. They come in five, ten and thirty years, starting at $100. At the September seventeenth auction, ten-year TIPS sold at a high yield of 2.653%. In August, thirty-year TIPS sold at 2.973.

The catch: if you sell a bond before it matures, the SEC warns, the U.S. government does not guarantee the market price or value of the bond. And taxes. Any increase in the principal during the year may affect your federal taxes, and the Treasury reports that change every year, even if your TIPS hasn't matured and you haven't been paid.

Here's the scoreboard, against prices up 3.7%. Savings, 0.37. The CD, 1.73. Money funds, 3.53.

The thirteen-week bill, 4.185. And the top two link to inflation itself: I bonds at 4.26% right now, and TIPS, whose principal follows the CPI.

Three Dates

Before you go, mark three dates. November first: the Treasury announces the new I bond rate. November tenth: the next inflation report from the BLS. And every month, on the third Monday, the FDIC updates its national rates.

Check yours against them. These are facts from official sources, not financial advice. And tell me in the comments: which of the seven holds most of your cash today? Back to Maya's $10,000.

At the national savings rate, it lost about $321 of buying power in a single year. All seven options were public the whole time. So were the numbers. Now you know where to look.