Treasury Inflation Protected Securities
TIPS as they are widely called are issued in terms of 5,10, and 20 years and essentially provide the fixed income security of a Treasury issue but do so with built in inflation protection. These securities are indexed to the Consumer Price index or CPI.

The way they work is simple. When inflation is on the rise, so does the TIPSą principal. When inflation is decline (deflation), the principal declines. When the TIPS reaches maturity, the owner of the security receives either the adjusted principal or the original investment, whichever is greater.

The interest is paid twice a year and like the principal, the amount of interest paid is adjusted upward when there is inflation and downward when there is deflation.