Fri Jan 12 01:45:00 CST 2018

Consensus Actual Previous
Month over Month 0.3% 0.3% 0.3%
Year over Year 1.2% 1.2% 1.2%

Consumer prices were unrevised in the final data for December. The headline index still shows a 0.3 percent monthly rise and a 1.2 percent annual inflation rate, in line with its final November mark.

The final HICP also matched its flash 0.4 percent monthly rise but its yearly rate was revised 0.1 percentage points softer to 1.2 percent, its third consecutive month at this level.

Within the CPI basket, the largest monthly gains were seen in energy and services (both 0.5 percent), the latter reflecting the usual seasonal factors at year-end. Annual service sector inflation has been running at 1.0 percent since October. Elsewhere, yearly deflation in manufacturing (0.1 percent) eased for a fourth consecutive month.

However, seasonally adjusted, the CPI edged just 0.1 percent higher versus November when it rose 0.2 percent. Indeed, the core index was only flat at November's level although positive base effects still nudged its annual rate up to 0.6 percent following five months stuck at 0.5 percent.

The final December data may offer some limited evidence that faster economic growth is finally starting to give a boost to underlying prices. Nonetheless, competitive factors remain intense and any further acceleration near-term is likely to be only very limited.

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.