Eurozone inflation was unrevised in April. At 7.0 percent, the final annual rate was in line with its flash estimate and just a tick higher than March's final 6.9 percent. Though this is the first acceleration since last October, it's still the second lowest rate since February 2022; nevertheless, inflation remains fully 5.0 percentage points above the ECB target.

Still, importantly the pick-up in the headline rate was not mirrored in the core rates. Hence, the narrowest measure eased a tick from March's 5.7 percent record high to an unrevised 5.6 percent, its first decline since June 2022. Similarly, excluding just energy and unprocessed food, the rate cooled from an all-time peak of 7.5 percent to 7.3 percent. Elsewhere, non-energy industrial goods inflation fell from 6.6 percent to 6.2 percent but, more ominously, inflation in services (5.2 percent after 5.1 percent) edged firmer again. Energy (2.4 percent after minus 0.9 percent) also provided a boost but food, alcohol and tobacco (13.5 percent after 15.5 percent) for once decelerated.

The ECB has already made it very clear that it is not happy with current underlying inflation trends and today's update will do nothing to change that view. The flash May HICP report (due 1 June) will need to be very well behaved to prevent key interest rates being hiked again next month. The Eurozone ECDI now stands at minus 32 and the ECDI-P at a lowly minus 45 but, for now, underperforming economic activity in general will not deflect the central bank off its tightening path.

No revisions are expected, leaving a 7.0 percent headline annual rate, up from March's final 6.9 percent, and a 5.6 percent core, down from 5.7 percent.

The harmonised index of consumer prices (HICP) is a measure of consumer prices used to calculate inflation on a consistent basis across the European Union. Changes in the index provide an estimate of inflation, as targeted by the European Central Bank (ECB). Eurostat provides statistics for the EU and Eurozone aggregates, individual member states and for the major subsectors. Over the short-term, the central bank focusses on a number of core measures which seek to strip out the most volatile components and so give a much better guide to underlying developments. Amongst these, financial markets normally concentrate upon the narrowest gauge which excludes energy, food, alcohol and tobacco.

The measure of choice in the European Monetary Union (EMU) is the harmonized index of consumer prices which has been constructed to allow cross member state comparisons. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In the European Monetary Union, where monetary policy decisions rest on the ECB's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.

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.

Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. 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 HICP are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.