Consumer prices were weaker than expected in May. A provisional flat monthly reading was a couple of ticks less than the market consensus and soft enough to leave the annual inflation rate unchanged at 2.2 percent, matching its weakest print since August 2021.

However, the flash HICP was rather stronger, posting a 0.2 percent monthly gain that lifted its yearly rate from April's final 2.4 percent to 2.7 percent, now 0.7 percentage points above the ECB's target.

The stable annual CPI rate reflected a 0.3 percentage point decline in services to 2.7 percent that was offset by gains in food (1.3 percent after 1.2 percent) and energy (5.8 percent after 3.8 percent). Prices of manufactured products in total were flat on the year after a 0.1 percent dip in April. Accordingly, the signs are that core inflation eased slightly.

Following the advances already announced in both Germany and Spain, the French update increases the likelihood of an acceleration in the overall Eurozone HICP inflation rate due later this morning. As such, the May data argue against another cut in ECB's interest rates as soon as July. For France, today's updates reduce the national RPI to minus 41 and the RPI-P to minus 38. Both readings show economic activity in general now underperforming by some margin and by easily the most so far in 2024.

Consumer prices are seen up 0.2 percent on the month, lifting the yearly inflation rate from April's final 2.2 percent to 2.4 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.