May 16, 2017 01:45 CDT

Consensus Actual Previous
Month over Month 0.1% 0.1% 0.1%
Year over Year 1.2% 1.2% 1.2%

April consumer prices were unrevised in the final report. A 0.1 percent monthly rise put the CPI 1.2 percent above its level a year ago, up a tick from March's annual rate to equal its February mark.

The flash HICP was similarly unrevised and so still shows a 0.1 percent monthly increase and, for the third month in a row, a 1.4 percent yearly rate.

As indicated previously, the gentle acceleration in the headline annual rate reflected reduced deflation in manufacturing where prices fell 0.7 percent after a 1.0 percent drop last time. Services on the other hand saw their rate dip a tick to 1.0 percent.

Seasonally adjusted, the CPI again recorded no monthly change, matching its performance in March. However, the core index rose 0.2 percent on the month which was enough to lift the yearly underlying rate from 0.4 percent to 0.5 percent although this was still short of January's 0.7 percent peak.

All in all deflation risks seem to be much less of a threat to the French economy but underlying prices are still only recovering slowly and will probably need faster growth of domestic demand if they are to continue to do so.

The consumer price index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat's harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.

The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer. As a member of the European Monetary Union, France's interest rates are set by the European Central Bank.

France like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). The HICP is calculated to give a comparable inflation measure for the EMU. Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies.

Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.

By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.