| Actual | Previous | |
| Month over Month | 0.4% | 0.4% |
| Year over Year | 1.0% | 1.0% |
| HICP - M/M | -1.0% | -1.0% |
| HICP - Y/Y | 1.0% | 1.0% |
Highlights
Consumer prices climbed 0.4 percent in January from their December levels and were 1.0 percent higher than a year-ago, according to final figured released today. The result matches the preliminary estimate reported earlier this month. Excluding energy and fresh food, prices rose a more modest 0.1 percent month-on-month, but were 1.8 percent higher than a year ago.
Energy prices rose 1.6 percent in January, led by an 8.9 percent increase for regulated energy. Compared to year-ago, prices fell 6.2 percent and 9.6 percent, respectively.
Those increases are reflected in prices for goods which increased 0.7 percent month-on-month, but were down 0.2 percent year-on-year. Prices for services were tamer, increasing only 0.1 percent from December, although 2.5 percent higher than a year ago.
Consumers paid 0.8 percent more in January for durable goods, while those for non- and semi- durables rose 0.2 percent.
Today's increase reflects price increases are specific to Italy and not suggestive of broader price pressures for Europe. The HICP measure used to compare inflation among European economies fell by 1.0 percent in January and rose 0.9 percent from a year ago.
Definition
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.
Description
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.