The TIPS index ratio is a daily multiplier the U.S. Treasury uses to scale a Treasury Inflation-Protected Security’s principal for inflation. You get it by dividing the Reference CPI for a given date by the Reference CPI on the bond’s original issue date. That single number drives your adjusted principal, your semi-annual coupon payment, and the dollar amount that changes hands if you buy or sell the bond before maturity.
Written as a formula:
Index Ratio = Reference CPI for the settlement date ÷ Base CPI of the bond
If a bond was issued when the Reference CPI was 260.00000 and today’s Reference CPI is 273.00000, the index ratio is 1.05000. Inflation has increased the bond’s principal by 5% since issuance.
The Two CPI Inputs
Both numbers in the formula come from the Consumer Price Index for All Urban Consumers (CPI-U), non-seasonally adjusted.1TreasuryDirect. Treasury Inflation-Protected Securities (TIPS) Ref CPI and Index Ratios for October 2025
- The Reference CPI is the interpolated CPI-U value assigned to the date you’re evaluating. It changes every day.
- The Base CPI is the Reference CPI in effect on the bond’s original dated date. It is locked in for the life of the security.
One detail catches people off guard: the CPI data used for any given date comes from three months earlier. The Reference CPI for July 1, for example, is the CPI-U reading from April. The lag exists so the Bureau of Labor Statistics has time to publish the data and the Treasury can announce index ratios in advance. The governing rules for Treasury marketable securities sit in 31 CFR Part 356.2eCFR. 31 CFR Part 356 – Sale and Issue of Marketable Book-Entry Treasury Bills, Notes, and Bonds
How the Daily Number Is Built
The BLS publishes CPI-U monthly, but TIPS trade every business day. To fill the gap, the Treasury assigns a Reference CPI to every calendar day by linearly interpolating between the two known first-of-month values.3eCFR. 31 CFR Appendix B to Part 356 – Formulas and Tables
For day d of a month with D total days:
Ref CPI(day d) = Ref CPI(1st of this month) + [(d − 1) ÷ D] × [Ref CPI(1st of next month) − Ref CPI(1st of this month)]
Say the first-of-month Reference CPI is 322.56100 and next month’s is 323.04800. The Reference CPI for the 15th day of a 31-day month is 322.56100 + (14 ÷ 31) × (323.04800 − 322.56100) = 322.78088. That interpolated value goes into the ratio formula.
The Treasury truncates both the Reference CPI and the index ratio to six decimal places during intermediate steps, then rounds the final published index ratio to five decimals.3eCFR. 31 CFR Appendix B to Part 356 – Formulas and Tables The precision keeps rounding errors from compounding across the very large outstanding stock of TIPS.
How the Ratio Adjusts Principal and Interest
Apply the index ratio to the bond’s original par value to get the inflation-adjusted principal:4TreasuryDirect. TIPS/CPI Data – Section: Calculating Your Inflation-Adjusted Interest Payment
Inflation-Adjusted Principal = Original Par Value × Index Ratio
A $1,000 TIPS with an index ratio of 1.05000 has an adjusted principal of $1,050. The Treasury calculates each semi-annual coupon on that adjusted figure. On a 2% fixed coupon rate, you receive 1% of $1,050, or $10.50, rather than 1% of the original $1,000.4TreasuryDirect. TIPS/CPI Data – Section: Calculating Your Inflation-Adjusted Interest Payment Principal and income both grow with inflation.
The same mechanics apply to every TIPS regardless of maturity. Treasury issues TIPS in 5-year, 10-year, and 30-year terms.5TreasuryDirect. Treasury Inflation-Protected Securities (TIPS)
What Happens When the Ratio Falls Below 1
When consumer prices fall, the index ratio drops below 1.00000 and the adjusted principal dips below the original par value. Coupon payments shrink too, because each one is a percentage of the smaller adjusted principal. Through a sustained deflationary stretch, every semi-annual check gets smaller.
At maturity, however, there is a floor. You receive either the inflation-adjusted principal or the original par value, whichever is greater.5TreasuryDirect. Treasury Inflation-Protected Securities (TIPS) So if deflation pushes the adjusted principal below what you originally invested, you still get your full par value back at redemption. The floor covers principal at maturity only; it does not reimburse the reduced coupon payments you received along the way.
How the Ratio Prices a Secondary Market Trade
The index ratio matters even if you never plan to hold a bond to maturity. Market quotes for TIPS are typically expressed as a real or “clean” price that excludes both inflation adjustments and accrued interest. Converting that quote into actual dollars requires the ratio on the settlement date.
Settlement per $100 of original principal breaks into two pieces:6Electronic Code of Federal Regulations (e-CFR). Appendix B to Part 356 – Formulas and Tables
- The adjusted price, which is the clean quoted price multiplied by the index ratio for the settlement date.
- The adjusted accrued interest, which is the unadjusted accrued interest (based on the real coupon rate and how far into the current coupon period you are) multiplied by that same index ratio.
The total settlement amount is the sum of the two.7TreasuryDirect. The Calculation of Interest on Treasury Inflation-Protected Securities (TIPS)
Taxes on the Annual Inflation Adjustment
The IRS treats each year’s increase in inflation-adjusted principal as taxable income in the year it occurs, even though you don’t actually receive the money until the bond matures or you sell. Federal regulations classify these positive adjustments as original issue discount (OID).8eCFR. 26 CFR 1.1275-7 – Inflation-Indexed Debt Instruments The Treasury reports the inflation adjustment on Form 1099-OID, Box 8, which covers OID on U.S. Treasury obligations.9Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID In deflationary years, that Box 8 figure can be negative, offsetting other OID income. Stated coupon interest may be reported separately on Form 1099-INT.
Because tax is due annually on principal gains you can’t yet spend, many advisors suggest holding TIPS inside tax-advantaged accounts such as IRAs or 401(k)s. In a taxable brokerage account, be ready to pay income tax each year on principal gains that stay locked in the bond.
How CPI Revisions Get Handled
Occasionally the BLS revises previously published CPI data, or data is delayed entirely. Under the Treasury’s index contingency provisions, if official CPI numbers are unavailable and the Treasury has to estimate an index number, the estimate stands permanently. Even if the BLS later publishes actual CPI for that period, the Treasury does not go back and retroactively adjust index ratios or recalculate payments already made.10U.S. Department of the Treasury. Treasury Uses Index Contingency Provisions for Treasury Inflation-Protected Securities The same principle generally applies to routine monthly revisions: once published, index ratios stay put.
Where to Look Up Index Ratios
The Bureau of the Fiscal Service publishes daily index ratios for every outstanding TIPS. The main public resource is TreasuryDirect, which organizes current and historical ratios by security.11TreasuryDirect. TIPS/CPI Data To pull data for a specific bond you need the maturity date or the CUSIP, the nine-character alphanumeric code assigned to every U.S. security. New data appears shortly after each monthly BLS release.
For programmatic access, the Treasury’s Fiscal Data platform offers a public API with a summary table (security-level information such as interest rate, term, original auction date, and Reference CPI on the dated date) and a details table (daily Reference CPI and index ratio for each date and CUSIP).12U.S. Treasury Fiscal Data. TIPS and CPI Data The details table is the one that reproduces the day-by-day ratios used in every calculation above.