| Consensus | Consensus Range | Actual | Previous | |
| Month over Month | 0.4% | 0.4% to 0.4% | 0.4% | 0.4% |
| Year over Year | 3.2% | 3.2% to 3.2% | 3.2% | 3.2% |
| HICP - M/M | 0.3% | 0.4% | ||
| HICP - Y/Y | 3.2% | 3.3% |
Highlights
Consumer prices rose 0.4 percent in May and 3.2 percent year on year according to final results which matched both the preliminary reading and the median of an Econoday survey of economists' forecasts.
Core inflation which excludes fresh food and energy saw prices rise 0.3 percent month-on-month and 1.7 percent year-on-year. Energy prices gained 0.3 percent from a month ago and stood 5.6 percent above their level from a year ago.
Overall prices for goods rose modestly in May, up 0.1 percent from April while increasing 3.4 percent from May of last year. At the same time, services increased 0.6 percent month-on-month and 2.8 percent year-on-year.
The harmonized index showed a 0.3 percent month-on-month increase and a 3.2 percent year on year gain, with both results 0.1 percentage point below the preliminary readings of 0.4 percent and 3.3 percent.
Market Consensus Before Announcement
The consensus sees no revision from the flash to the final with increases of 0.4 percent on month and 3.2 percent on year for May.
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.