Inflation increased modestly in July from the previous month at 0.2 percent, driven largely by significant monthly hikes in service sector prices, particularly transport inflation which, up 9.3 percent on the month, and accommodation services which rose by 12.6 percent and which typically surge in summer. Energy prices also contributed to the increase, rising by 1.4 percent. However, the impact was tempered by falls in the prices of manufactured goods by minus 2.3 percent and food prices by minus 0.2 percent, due to summer sales.

Year-over-year, consumer prices saw a 2.3 percent increase, slightly up from June's 2.2 percent, with energy costs, especially gas being the primary driver at 11.4 percent. In contrast, annual inflationary pressures eased in services at 2.6 percent and food 0.5 percent. Core inflation fell to 1.5 percent from 1.8 percent, indicating a mild underlying price momentum. Meanwhile, the harmonised index of consumer prices mirrored these trends with a 0.2 percent month-over-month increase and a 2.7 percent year-over-year rise.

Overall, the report highlights energy costs, accommodation services, and service sector prices as primary drivers of inflation in July, partially offset by declines in the manufacturing sector goods and food prices, maintaining low levels of inflation in France.

No revisions are expected to the provisional data leaving a 0.1 percent monthly rise in consumer prices and a 2.3 percent annual inflation rate, the latter up from June's final 2.2 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.