Eurozone inflation was unrevised in the final data for June. At 5.5 percent, the annual rate remained down 0.6 percentage points versus May's final 6.1 percent and at its lowest level since January 2022. However, the latest reading was still some 3.5 percentage points above the ECB target.

More importantly anyway, the narrowest core rate was revised up to also 5.5 percent, now 0.2 percentage points above its May reading and just a couple of ticks below March's record high. Excluding just energy and unprocessed food, the rate was unrevised at 6.8 percent, down 0.1 percentage point versus the previous month.

Energy prices again did much of the work lowering the headline rate and inflation here dropped from May's minus 1.8 percent to minus 5.6 percent. Non-energy industrial goods (5.5 percent after 5.8 percent) also subtracted as did food, alcohol and tobacco (11.6 percent after 12.5 percent). However, service sector prices accelerated further from 5.0 percent to 5.4 percent.

Today's revisions are only minor but will not sit well with the ECB. Crucially, service sector inflation is still accelerating and supporting underlying inflation at levels nowhere near the 2 percent target. Another 25 basis point hike in key ECB interest rates next week is now all the more assured. The June update leaves both the Eurozone's ECDI (minus 30) and ECDI-P (minus 40) deep in negative surprise territory. Economic activity continues to fall well short of expectations as it has done since early May.

No revision is expected leaving a 5.5 percent annual headline rate, down from May's final 6.1 percent, and a 5.4 percent narrow core, up from 5.3 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.