There were no real surprises in the provisional data for April. Consumer prices rose 0.2 on the month, trimming the annual inflation from March's final 1.0 percent to 0.9 percent, just a tick short of the market consensus.

The flash HICP climbed a much steeper 0.6 percent on the month, but this was still small enough to reduce its yearly rate from 1.2 percent to 1.0 percent, now a full percentage below the ECB's target.

April's fall in annual CPI inflation was largely attributable to non-regulated energy (minus 13.9 percent after minus 10.3 percent), transport (2.9 percent after 4.5 percent) and miscellaneous services (1.8 percent after 2.3 percent). Regulated energy (0.8 percent after minus 13.8 percent) and recreation (3.8 percent after 3.2 percent) provided the main boost. Consequently, core inflation edged a tick lower to 2.2 percent.

The provisional April report leaves Italy close to the bottom of the Eurozone inflation ladder and no significant threat to the ECB's inflation target. The data also put the Italian RPI at minus 17 and the RPI-P at exactly zero, meaning that, in line with the overall Eurozone, limited underperformance by economic activity in general is solely due to unexpectedly soft prices.

Consumer price inflation is expected to move even lower, to a consensus 1.0 percent in April versus a final 1.2 percent in March.

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.