> The coupon rate is fixed at the time of issuance, but the principal is adjusted periodically based on changes in the Consumer Price Index (CPI), the most comm

> The coupon rate is fixed at the time of issuance, but the principal is adjusted periodically based on changes in the Consumer Price Index (CPI), the most commonly used measure of inflation. When the CPI rises, the principal is adjusted upward; if the index falls, the principal is adjusted downwards.[16] The adjustments to the principal increase interest income when the CPI rises, thus protecting the holder's purchasing power. [1] [1] https://en.wikipedia.org/wiki/United_States_Treasury_security#TIPS https://en.wikipedia.org/wiki/United_States_Treasury_securit... Well, since houses are deliberately kept out of CPI, it systematically underestimates housing cost increases and thus the increasing prices of a big chunk of actual living costs. Not a good basis for "protecting the holder's purchasing power". I'd guess this is also one important reason why not basically everybody is simply buying these TIPS with their long term savings. Otherwise it'd be kind of a magical way to keep your buying power. Just too good to be true.