The final data for November confirmed the sharp slowdown in inflation shown in the provisional report. A 0.4 percent monthly fall in prices reduced the annual inflation rate from October's final 3.8 percent to 3.2 percent, its lowest mark since June 2021.

The flash HICP was similarly unrevised and so even weaker, posting a 0.7 percent drop on the month that put its yearly rate at 2.3 percent. This was down from 3.0 percent previously and now only 0.3 percentage points above the ECB's target.

The latest fall in the annual CPI rate was attributable to sizeable declines in both goods, where inflation dropped from 3.6 percent to 3.0 percent, and services, where the rate decreased 0.5 percentage points to 3.4 percent. Energy (minus 4.5 percent after minus 3.2 percent) and food (5.5 percent after 6.1 percent) also subtracted but core inflation still fell from 4.3 percent to an unrevised 3.8 percent.

Sizeable back-to-back declines in both the headline and core inflation rates should help to ease concerns among the German policymakers that prices are out of control. Still, expect Bundesbank Chief Joachim Nagel to emphasise the need to keep borrowing costs high at next week's ECB meeting. The final November data leave both the German RPI and RPI-P at 4, meaning that overall economic activity is moving broadly in line with market expectations.

No revisions are expected, leaving a 0.4 percent monthly fall in prices and a 3.2 percent annual inflation rate, down from October's 3.8 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.