Consumer prices were surprisingly firm in April. A provisional 0.6 percent monthly gain boosted the annual inflation rate from February's final 5.7 percent to 5.9 percent, some 0.3 percentage points above the market consensus albeit only a 2-month high. The rate now stands 0.4 percentage points below its February peak.

The flash HICP largely followed suit, posting a 0.7 percent monthly increase that lifted its yearly rate from 6.7 percent to 6.9 percent, now some 4.9 percentage points above the ECB's target.

Ominously, the acceleration in the annual CPI rate was essentially attributable to services where inflation climbed from 2.9 percent to 3.2 percent, largely reflecting higher transport costs. Overall manufactured products (4.7 percent after 4.8 percent) were slightly softer as was food (14.9 percent after 15.9 percent) but energy (7.0 percent after 4.9 percent) also moved higher. Consequently, the core rate (6.2 percent) in April may have edged a little firmer too.

The pick up in French HICP inflation does not bode well for the overall Eurozone rate due next week. Moreover, with the core component likely still very sticky, the ECB will not be impressed. Today's updates put the French ECDI at 14 and the ECDI-P at minus 10. In other words, while overall economic activity is running a little hotter than expected, outperformance is solely due to surprisingly firm prices a key reason for anticipating another ECB interest rate hike next week.

Inflation in April is expected to slow marginally to a 5.6 percent year-over-year rate versus 5.7 percent in March.

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.