Eurozone inflation rate was marginally softer in the final report for November. At 2.2 percent, the yearly rate was a tick below its flash estimate albeit still 0.2 percentage points above both October and the ECB's target. Month-over-month, prices declined an unrevised 0.3 percent.

The narrow core HICP fell an unrevised 0.6 percent on the month, leaving its yearly change at 2.7 percent and so still matching October's final outcome. Services were the largest driver of inflation, contributing 1.74 percentage points but rate here at least eased from 4.0 percent to 3.9 percent. The rate for food, alcohol, and tobacco also dropped from 2.9 percent to 2.7 percent but for non-energy industrial goods edged up from 0.5 percent to 0.6 percent. Energy (minus 2.0 percent after minus 4.6 percent) provided a more sizeable boost.

Regionally, headline inflation rose in France (1.7 percent after 1.6 percent), Italy (1.5 percent after 1.0 percent) and Spain (2.4 percent after 1.8 percent), but remained stable in Germany (2.4 percent). Inflation rates in France and Italy remain below the European Central Bank's target, while Germany and Spain exceed it.

The downward revision to the headline rate will have little impact on the ECB which will note the persistent buoyancy of services. Still, trends are moving in the right direction and should be reflected in further cuts in key interest rates in 2025. Today's report puts both the region's RPI and RPI-P at 8, meaning that economic activity in general is running just slightly ahead of market expectations.

Forecasters expect no revision to the flash data leaving the headline inflation rate at 2.3 percent on year and narrow core at 2.7 percent.

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.