The consumer price index is provisionally expected to rise 2.3 percent year-over-year and 0.3 percent month-over-month. On the other hand, the harmonised index of consumer prices is expected to rise by 2.6 percent year-over-year and 0.5 percent from the previous month.

Furthermore, energy prices are expected to fall by 1.7 percent, offering some relief amidst broader inflationary trends. However, food prices is provisional expected to rise by 1.3 percent, underscoring ongoing pressures on household budgets for essential items.

Stripping out food and energy, inflation is set to rise by 2.9 percent, indicating underlying inflationary pressures. Furthermore, services inflation is set to jump 3.9 percent, reflecting increased costs in sectors like hospitality and transportation. Goods inflation, is expected to rise modestly by 0.9 percent, suggesting relatively stable prices for consumer goods.

The expected rise in inflation in the month of July underscores the need for balanced policy measures to manage inflation without stifling economic growth. Today's update weakens the German RPI to minus 34 and the RPI-P to minus 51, which implies that economic activities are performing below market expectations.

July's consensus is no change at June's 2.2 percent. May's rate was 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 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.