Consumer prices were a little softer than originally reported, rising just 0.1 percent on the month in the final data for January. In turn, this put the headline annual inflation rate at 10.0 percent, also down a tick versus its provisional estimate and now 1.6 percentage points short of its final January mark.

The flash HICP was also revised weaker to show a monthly 1.5 percent decline. This lowered its yearly rate to 10.7 percent, down from January's final 12.3 percent but still some 8.7 percentage points above the ECB's target.

As it is, once again the fall in the annual CPI inflation rate was largely attributable to weaker regulated energy (minus 12.0 percent after 70.2 percent) and, to a much lesser extent, non-regulated energy (59.3 percent after 63.3 percent). Unprocessed food (8.0 percent after 9.5 percent) and recreational services (5.5 percent after 6.2 percent) also subtracted. As a result, core inflation stood at 6.0 percent, in line with its initial estimate but still up from January's 5.8 percent.

Consequently, the trend in underlying inflation remains up and a real worry for the ECB. The revised January data put the Italian ECDI at minus 7, indicating a very modest degree of overall economic underperformance. However, note that the sub-zero reading here is wholly attributable to the unexpected weakness of prices and the ECDI-P stands at a relatively firm 26.

No revisions are expected to the provisional data.

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 provide widely used measures of inflation. A provisional estimate, with limited detail, is released about two weeks before the final data are reported.

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 such as the Italy 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, Italy's interest rates are set by the European Central Bank.

Italy like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The core CPI, which excludes fresh food, is usually the preferred indicator of short-term inflation pressures.

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.