Having fallen for three consecutive months, the downtrend in inflation came to at least a temporary halt in April. However, a provisional 0.5 percent monthly increase in consumer prices was a tick short of the market consensus and only enough to leave the annual rate steady at 2.2 percent, matching its lowest level since April 2021.

However, the flash HICP was slightly stronger with a 0.6 percent monthly increase that lifted its yearly rate from 2.3 percent to 2.4 percent, now 0.4 percentage points above the ECB's target.

Still, the annual CPI rate would have declined but for higher posts by both food (0.5 percent after minus 0.7 percent) and energy (minus 1.2 percent after minus 2.7 percent). Gains here helped to boost overall goods inflation from 1.0 percent to 1.2 percent but inflation in services fell a tidy 0.3 percentage points to 3.4 percent. Consequently, the core rate declined from 3.3 percent to 3.0 percent.

Despite the uptick in the overall HICP inflation rate, the ECB should view today's update favourably. The marked deceleration in the core CPI and services should sit very well and point to a friendly flash HICP report for the full Eurozone tomorrow. For Germany, the April data leave the RPI at 28 and the RPI-P at 53. Both readings show economic activity in general running well ahead of market expectations.

April's consensus for the national CPI is a year-over-year 2.3 percent versus March's 2.2 percent rate that was down from 2.5 percent in February and 2.9 percent in January. Consensus for the HICP is also 2.3 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.