Inflation was unrevised in the final report for June. A second successive 0.2 percent monthly rise in the HICP put the annual rate at 2.5 percent, a tick short of its final May print. However, the previous 0.2 percentage point gain was not fully reversed leaving a broadly flat trend since February and a 0.5 percentage point overshoot versus the medium-term target.

The final core rates were also in line with their flash estimates. This left the narrowest measure at 2.9 percent, unchanged from May, and the measure excluding just energy and unprocessed food only 0.1 percentage point lower at 2.8 percent. Services were again a problem with the rate here holding steady at a worryingly solid 4.1 percent, some 0.4 percentage points above April's recent low. Elsewhere, non-energy industrial goods were similarly steady but at just 0.7 percent while energy (0.2 percent after 0.3 percent) and food, alcohol and tobacco (2.4 percent after 2.6 percent) both had a minor negative impact.

Regionally, headline inflation cooled in France (2.5 percent after 2.6 percent), Germany (2.5 percent after 2.8 percent), and Spain (3.6 percent after 3.8 percent) but edged firmer from an easily sub-target level in Italy (0.9 percent after 0.8 percent).

The final June data will have no impact on the tomorrow's ECB announcement. Unchanged key interest rates seem all but given meaning that there will be no cut until at least 12 September when the central banks holds its the first meeting after the summer recess. Today's update puts the Eurozone RPI at 23 and the RPI-P at 28, both readings pointing to a modest degree of recent outperformance by economic activity in general.

No revisions are expected to the flash data leaving a 2.5 percent annual inflation rate, down from May's final 2.6 percent. At 2.9 percent the final narrow core CPI rate is seen matching both its flash and previous month's posts.

The harmonised index of consumer prices (HICP) is a measure of consumer prices used to calculate inflation on a consistent basis across the European Union. Changes in the index provide an estimate of inflation, as targeted by the European Central Bank (ECB). Eurostat provides statistics for the EU and Eurozone aggregates, individual member states and for the major subsectors. Over the short-term, the central bank focusses on a number of core measures which seek to strip out the most volatile components and so give a much better guide to underlying developments. Amongst these, financial markets normally concentrate upon the narrowest gauge which excludes energy, food, alcohol and tobacco.

The measure of choice in the European Monetary Union (EMU) is the harmonized index of consumer prices which has been constructed to allow cross member state comparisons. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In the European Monetary Union, where monetary policy decisions rest on the ECB's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.

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.

Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. 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 HICP are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.