| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.4% | 1.1% | ||
| Year over Year | 3.3% | 3.2% to 3.4% | 3.2% | 2.7% |
| HICP - M/M | 0.4% | 1.6% | ||
| HICP - Y/Y | 3.3% | 2.8% |
Highlights
Consumer prices rose 0.4 percent in May and 3.2 percent from their year ago levels, with the monthly rate slowing from 1.1 percent the month before while the year-on-year rate climbed to 3.2 percent from 2.7 percent the previous month. Still, the annual rate is slightly below what economists were expecting according to an Econoday survey of economists' forecasts.
Energy prices rose 0.5 percent in May compared to the previous month and 12.0 percent from the same time a year ago. Food and alcohol prices were 0.4 percent higher on the month and 2.7 percent higher from a year ago.
Core inflation which excludes energy and unprocessed food rose 0.4 percent month-on-month and 1.8 percent from a year ago.
The harmonized inflation index, HICP, which uses the same methodology to compare inflation across European countries rose 0.4 percent in May and 3.3 percent from a year ago.
The conflict in the Middle East continues to push prices higher on both the producer and consumer level and with no signs of an immediate solution, pressures will continue.
Market Consensus Before Announcement
Fuel price jump seen lifting CPI to 3.3 percent increase on year in May versus 2.7 percent in April.
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.