Prices were unrevised in January. A final 0.3 percent monthly increase matched the provisional estimate, in turn lifting annual inflation from December's final 0.6 percent to 0.8 percent.

The flash HICP was similarly unrevised, showing a 1.1 percent monthly decline (largely due to winter sales not included in the CPI) that saw its yearly rate climb from 0.5 percent to 0.9 percent. The yearly figure stands 1.1 percentage points below the ECB's target.

January's acceleration in the annual CPI rate was largely attributable to transport (4.2 percent after 3.7 percent), unprocessed food (7.5 percent after 7.0 percent) and regulated energy (minus 20.6 percent after minus 41.6 percent). On the downside, the main effects came from housing (2.8 percent after 4.2 percent) and durable goods (0.7 percent after 1.5 percent). Consequently, core inflation continued to decline, easing from 3.1 percent to a downwardly revised 2.7 percent.

Today's update reaffirms that inflation in Italy is not much of a worry for the ECB. The narrow core HICP rate is still above the 2.0 percent target but, at 2.8 percent, by only 0.8 percentage points and it has fallen every month since last September. Indeed, today's report puts the Italian RPI at minus 7 and the RPI-P at 13, the gap between the two gauges showing that recent inflationary shocks have been on the downside.

Consumer prices are seen unrevised in the final data, leaving a 0.3 percent monthly increase and a 0.8 percent annual inflation rate, the latter up from December's final 0.6 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 the Italy 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, Italy's interest rates are set by the European Central Bank.

Italy like other EMU countries has both a national CPI and a harmonized index of consumer prices (HICP). Components and weights within the national CPI vary from other countries, reflecting national idiosyncrasies. The core CPI, which excludes fresh food, is usually the preferred indicator of short-term inflation pressures.

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.