| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.5% | 0.5% to 0.5% | 0.5% | 0.5% |
| Year over Year | 1.7% | 1.7% to 1.7% | 1.7% | 1.7% |
| HICP - M/M | 1.7% | 1.6% | ||
| HICP - Y/Y | 1.6% | 1.5% |
Highlights
Consumer prices rose 0.5 percent in March compared to the previous month, and stood 1.7 percent above year-ago levels, according to final figures reported today. The results confirm the preliminary readings.
The harmonized result which uses the same methodologies across European economies however, saw prices rise 1.7 percent from February when they rose 1.6 percent. Year-on-year, the HICP was 1.6 percent higher in March after a 1.5 percent gain the month before.
Transportation costs rose 2.5 percent in March, hardly surprising given the conflict in the Middle East, after a 0.1 percent decline the previous month. From March of last year, they stand 2.1 percent higher. In February they fell 0.5 percent.
Also not spared from the events in the Middle East were utilities prices which also include gas and other fuels. These increased 1.8 percent month on month while falling 1.6 percent year-on-year.
There is little doubt energy prices pressures will continue in April and the coming months. The question is to what extent this will spill over into consumer confidence and subsequently retail sales. It's very likely that consumers will pull back on their discretionary spending as fuel costs bite.
Market Consensus Before Announcement
No revision expected from the flash for the final at 0.5 percent on month and 1.7 percent on year in March.
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.