As a result, it is reducing the rates paid to new investors who take out fixed-interest savings certificates, children's bonus bonds, guaranteed income bonds and guaranteed growth bonds.
The biggest reduction will be to children's bonus bonds, with returns on these cut by 0.75% to 3.70%, with three and five-year guaranteed income and guaranteed growth bonds also suffering a 0.75% cut.
Interest rates on the other products are all being reduced by 0.55%.
Kevin Mountford, head of banking at moneysupermarket.com, commented: "With inflation having risen again last month, the decision by NS&I to cut its savings rates is disappointing, particularly as we haven't seen any change in Bank rate since April.
"Savers need to ensure they are earning the highest rate possible to minimise the impact inflation has on returns. And the good news is, that while NS&I is cutting rates, the savings market as a whole remains highly competitive with institutions still battling for our money.
"The best easy access accounts are paying more than 6.50% and if you are prepared to lock your money away for a year, you can earn even more."
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