Consumer prices were somewhat stronger than expected in January. However, while a provisional 0.2 percent monthly fall was only half the market consensus, it was still steep enough to reduce the annual inflation rate from December's final 3.7 percent to 3.1 percent, its weakest print since January 2022.

The flash HICP also declined 0.2 percent versus December, trimming its yearly rate from 4.1 percent to 3.4 percent, now 1.4 percentage points above the ECB's target.

However, the slide in the annual CPI rate almost wholly attributable to energy, where the inflation rate dropped from 5.7 percent to 1.8 percent, and food, where the rate declined 1.5 percentage points to 5.7 percent. The fall in energy helped to halve the rate in overall manufactured goods to 0.7 percent but services edged a tick higher to 3.2 percent. Consequently, the core rate was probably only broadly stable.

Today's update bodes well for a weaker Eurozone headline inflation rate this month (flash data due tomorrow) but the ECB will be more focused on the core. The French RPI now stands at 18 and the RPI-P at 5, both measures indicating overall economic activity running just a little hotter than expected.

Prices are seen falling 0.4 percent on the month to reduce headline inflation from 3.7 percent to 2.9 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 represent the main rates of inflation. The national CPI is released alongside the HICP, Eurostat's harmonized measure of consumer prices. A flash estimate was released for the first time in January 2016 and is now published towards the end of each reference month.

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

France 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.

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.