Consumer prices were unrevised in the final data for July. A 0.3 percent monthly rise reduced the annual inflation rate from June's final 6.4 percent to 6.2 percent, reversing most of the 0.3 percentage point jump seen at quarter-end.

The final HICP similarly matched its flash estimate leaving a 0.5 percent gain versus June that trimmed its 12-month rate from 6.8 percent to 6.5 percent, now 4.5 percentage points above the ECB's target.

The monthly fall in the annual CPI rate was partly due to food where inflation decreased from 13.7 percent to 11.0 percent. However, energy (5.7 percent after 3.0 percent) climbed to a 3-month high helped by the base effects associated with the abolition of the renewables surcharge in July 2022. Still, with overall goods inflation (7.0 percent after 7.3 percent) declining and the rate in services services (5.2 percent after 5.3 percent) also edging lower, the core rate eased 0.3 percentage points to an unrevised 5.5 percent.

Today's update puts the German ECDI at 9 and the ECDI-P at 11, both measures showing that economic activity in general is running just a little hotter than market expectations

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 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.