Treasury Inflation Protected Securities - TIPS

A special type of Treasury note or bond that offers protection from inflation. Like other Treasuries, an inflation-indexed security pays interest every six months and pays the principal when the security matures. The difference is that the coupon payments and underlying principal are automatically increased to compensate for inflation as measured by the consumer price index (CPI). Also referred to as "Treasury inflation-indexed securities".

Investopedia Says:
If U.S. Treasuries are the world's safest investments, then you might say that TIPS are the safest of the safe. This is because your real rate of return, which represents the growth of your purchasing power, is guaranteed. The downside is that, because of this safety, TIPS offer a low return.

Other countries have similar securities. For example, in Canada this is known as a "real return bond" (RRB).

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United States Treasury securities issued at a fixed rate of interest but with principal adjusted every six months based on changes in the Consumer Price Index. At maturity, TIPS, which are issued in January and July as 10-year and 30-year notes, and in October as 30-year bonds, are redeemable either at their inflation-adjusted principal or their face value, whichever is greater. TIPS sacrifice some yield as a tradeoff for the inflation protection and the inflation adjustment is federally taxable annually, although not paid out until maturity. See also I-Bonds; Inflation-Indexed Securities.