Having fallen for three consecutive months, the downtrend in inflation came to at least a temporary halt in April. A final 0.5 percent monthly increase in consumer prices was in line with the provisional estimate, leaving the annual rate steady at March's 2.2 percent and so still matching its lowest level since April 2021.

The flash HICP was similarly unrevised with a 0.6 percent monthly increase that lifted its yearly rate from March's final 2.3 percent to 2.4 percent, some 0.4 percentage points above the ECB's target.

Still, as shown in the preliminary data, 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.

There is nothing in today's report to dampen a strong market conviction that the ECB will ease next month. In particular, confirmation of the marked deceleration in the core CPI and services inflation should sit very well. For Germany, the final April data put the RPI at 18 and the RPI-P at 21, both readings showing economic activity in general running somewhat ahead of market expectations.

No revisions are expected to the provisional data, leaving the yearly CPI inflation rate at 2.2 percent, also unchanged from its final March reading.

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.