June 15, 2017 01:45 CDT

Consensus Actual Previous
Month over Month 0.1% 0.0% 0.1%
Year over Year 0.8% 0.8% 0.8%

Consumer prices were revised a little softer in the final data for May. The CPI now shows no change versus its final April level, down a tick from its provisional estimate. However, this still left the yearly inflation rate at 0.8 percent, as previously reported, and 0.4 percentage points short of its final reading last time.

The HICP was similarly trimmed 0.1 percentage points to yield a flat monthly performance and an unrevised 0.9 percent annual rate, off 0.5 percentage points from April.

The monthly change in overall consumer prices was boosted by food (0.7 percent) but this effect was roughly offset by weaker energy (minus 1.5 percent). Manufactured goods saw just a 0.1 percent increase while services were flat. Seasonally adjusted, the CPI fell 0.2 percent versus the start of the quarter within which the core component was unchanged. Even so, the annual underlying rate still eased a tick to 0.4 percent.

The final May CPI data confirm a still very subdued picture of underlying inflation pressures.

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.