The monthly consumer price was unrevised in February. A final 0.2 percent monthly increase matched the provisional print, but the annual inflation fell a tick from the preliminary February outturn to 1.6 percent, now just a 0.1 percentage point more than in January.

Both the monthly and the annual final HICP rates remained unrevised in February, showing a 0.1 percent increase on the month and a yearly rate of 1.7 percent, unchanged from January's final mark and 0.3 percentage points below the ECB's target.

February's uptick in the annual CPI rate reflected an acceleration in the growth of regulated energy prices (31.4 percent after 27.5 percent), unprocessed food (2.9 percent after 2.2 percent) and processed food (1.9 percent after 1.7 percent). However, these were partly offset by falls in transport services (1.9 percent after 2.5 percent) and communication (0.5 percent after 1.1 percent).

Core inflation declined again, easing from 1.8 percent to 1.7 percent.

The final February data again show that inflation in Italy is nothing much for the ECB to worry about. At 1.5 percent, the narrow core HICP rate is well below the 2.0 percent target.

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.