Consumer prices are expected to increase 0.4 percent in August from 0.2 percent in July, and post a 0.9 percent gain year-over-year, slowing from 1.0 percent in July, according to preliminary results released today.

Prices for services slowed further, increasing 2.1 percent in August, year-over-year, after 2.5 percent in July and 3.0 percent in June, mainly due to lower transportation costs. Food price inflation is expected to hold steady at 1.6 percent in August, although French consumers can expect fresh food prices to increase 1.7 percent from last August after a 1.6 percent gain in July.

Energy prices are expected to fall 6.2 percent compared to August of last year after a 7.2 percent slowdown in July.

The HICP used to compare inflation between European economies is seen slowing to 0.8 percent, year-on-year in August from 0.9 percent in July, while increasing 0.5 percent from July when prices rose 0.3 percent.

Looking solely at the August results, the level of inflation is not worrying. Even so, August is the first month of data in which the US tariffs took effect, and today's data could be the start of prices starting to move broadly higher.

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.