Final inflation estimates for June indicate that consumer inflation has risen slowly over the last three months, maintaining a consistent annual increase during this period. Italy's consumer price index showed minimal monthly growth of 0.1 percent and a stable annual increase of 0.8 percent in line with the flash estimates and matching the last three month's annual figures in June. This stability masks diverse trends: prices for unprocessed foods, recreational services, durable goods, and transport services slowed, while non-regulated energy, regulated energy, and processed food prices rose. Core inflation, excluding volatile items like energy and unprocessed food, eased slightly to 1.9 percent year-over-year.

The harmonized index of consumer prices increased by 0.2 percent month-over-month and 0.9 percent year-over-year, impacting low-expenditure households more significantly in second quarter 2024, with inflation rates diverging between the lowest household expenditure groups by minus 0.4 percent and highest household expenditure groups by 1.6 percent. This nuanced inflation landscape highlights both moderated and rising cost pressures across different sectors and demographics.

Italy's inflation rate stabilisation at between 0.1 and 0.2 percent month-over-month and 0.8 percent annually over the past three months suggests a moderate inflation environment, which may indicate more stable economic conditions compared to other Euro area countries facing higher inflation rates enhancing investor confidence in Italy's economic stability.

No revisions are expected to the provisional data leaving a 0.8 percent annual CPI rate, unchanged from May'/s final 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 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.