An inflation deposit is a type of deposit account such as a term deposit issued by a bank or financial institution. The special feature of this type of deposit it can have its interest payments linked to changes in inflation or CPI (Consumer Price Index). It is similar to a term deposit as you can set a term period for your investment.
This type of term deposit may suit an investor if they are looking to protect purchasing power of their initial deposit as well as receiving inflation adjusted returns on their principal. This product has market risk that the rate of inflation rates and CPI can move in a direction not favorable compared to return you could have received for other savings and deposit types in the market. Please note this product was found within an Australian bank product line.