The final data for June confirmed the first increase in inflation since January. Consumer prices matched their provisional 0.3 percent monthly rise, boosting their yearly rate from 6.1 percent to 6.4 percent. However, this was still well short of April's final 7.2 percent and even further below the 8.8 percent high seen last October/November.

The flash HICP was similarly unrevised and so still shows a 0.4 percent monthly gain and a 6.8 percent annual rate, up from May's final 6.3 percent and some 4.8 percentage points above the ECB's target.

The monthly increase in the annual CPI rate was driven by services where inflation jumped from 4.5 percent to 5.3 percent. The goods rate moved in the other direction, falling from 7.7 percent to 7.3 percent with a drop in food (13.7 percent after 14.9 percent) more than offsetting higher energy (3.0 percent after 2.6 percent). Consequently, core inflation (ex-food and energy) was unrevised at 5.8 percent, up from May's 5.4 percent and fully reversing that month's decline.

The final June data will ensure that the Bundesbank will be pushing hard for another hike in ECB interest rates at the policy meeting later this month. Meantime, the German ECDI now stands at minus 18 and the ECDI-P at minus 21. Both measures show that economic activity in general is still lagging market expectations.

No revision is expected leaving a 0.3 percent monthly rise and a 6.4 percent annual inflation rate, the latter up from May's final 6.1 percent.

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 Germany 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, Germany's interest rates are set by the European Central Bank.

Germany 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. The preliminary release is based on key state numbers which are released prior to the national estimate. The states include North Rhine-Westphalia, Baden-Wuerttemberg, Saxony, Hesse, Bavaria and Brandenburg. The preliminary estimate of the CPI follows in the same day after the last of the state releases. The data are revised about two weeks after preliminary release.

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.