Leeds launches new Bond guaranteed to beat inflation

Leeds Building Society is set to launch a new version of its Inflation Buster Bond, which has proved extremely popular with customers looking for a real return from their savings.

The Bond is guaranteed to beat inflation by 2.50% and any early investment, prior to strike date on 1 May 2008, will receive interest equivalent to the Bank of England Base Rate credited on 30 April 2008.

The return is linked to the Retail Price Index (RPI), which is the official measure of how much goods and services bought by an average UK household changes. Items measured by the RPI include food, clothing, education and child care, council tax, heating and lighting and mortgage interest payments.

The inflation rate is the percentage difference between RPI on two dates. So, if the RPI in January is 201.60 and the following January is 209.80, then the percentage change in RPI and the inflation rate over the period is 4.07%. In this scenario, inflation is 4.07% and Leeds Building Society’s Inflation Buster Bond would pay a return of 6.57%.

For example, if the rate of inflation is 4.07% a year over the term, an investment of £10,000 made on 8 March 2008 will have a pre-tax maturity value of £11,445.14 after two years. This is made up of £77.46 for early investment and £1,367.68 from the RPI inflation rate.

Karen Wint, General Manager Marketing and Customer Services said "The demand from customers for this bond has been very positive and, as a result, we are now launching a sixth issue. The annual change in RPI was 4.07% in January, which is an increase on the previous month. This product provides excellent peace of mind with the inflation link, so no matter what happens, customers will receive a guaranteed real return.

"Customers also have the flexibility to operate this bond at any of our 68 branches or by post. I believe this as an excellent addition to any investor’s portfolio."

For more information, customers can call into their local branch, visit the website at leedsbuildingsociety.co.uk.