I am not sure I would call premium bonds "investing", more like gambling without losing your stake.
Suppose you buy �1,000 of premium bonds, but in the first year you win nothing. Because inflation is now 3%, your �1,000 stake is now only worth �970.
If you were unlucky enough not to win in the second year either your �970 is now down to �940.
Now as pug100 says, the odds of winning are 3.5%, but you may be unlucky and win nothing, or at least less than 3.5%.
And each year you win nothing (or less than expected) the value of your money is dropping.