Because of their low yields, the real purchasing power of Treasuries may decline when inflation rises.
Additionally, government bonds usually guarantee principal and interest payments, providing investors with a fixed income. However, due to its relatively conservative nature, government bonds often offer lower returns.
One way to deal with inflation is to buy inflation-protected securities, such as Treasury Inflation-Protected Securities(TIPS) in the U.S. and Index-linked Gilts in the U.K. These securities provide a degree of inflation protection as their returns are correlated with the level of inflation. $iShares 20+ Year Treasury Bond ETF(TLT.US$ $S&P National Amt-Free Muni Bd Ishares(MUB.US$ $Vanguard Total International Bond ETF(BNDX.US$ $Vanguard Total International Bond ETF(BNDX.US$ $Short-Treasury Bond Ishares(SHV.US$
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