| Actual | Previous | |
| Month over Month | 1.0% | 1.0% |
| Year over Year | 2.2% | 2.2% |
| HICP - M/M | 1.2% | 1.2% |
| HICP - Y/Y | 2.5% | 2.5% |
Highlights
Consumer prices rose 1.0 percent in April from their March level and were 2.2 percent higher than a year ago, according to final results reported today, matching the preliminary estimates reported earlier this month.
Higher energy prices were responsible for the gains, as they rose 4.7 percent in April month-on-month while posting a 14.3 percent gain over their year-ago levels. This is the second month of the conflict in the Middle East which has been pushing energy prices higher. Still, compared to other European economies, inflation in France is relatively low. For now.
Higher energy prices were also reflected in higher transportation costs which rose 9.1 percent in April from a month ago, but were up a more modest 1.4 percent year-on-year.
Consumers spent 0.2 percent more on food in April than in March, with fresh food up 1.0 percent.
Core inflation which excludes energy and other volatile items rose 0.3 percent in April from March and 1.2 percent in April year-on-year after a 1.1 percent gain in March.
The Harmonized index of Consumer Prices (HICP) used to compare inflation across European economies increased 1.2 percent month-on-month and 2.5 percent year-on-year, also matching preliminary estimates.
With the Middle East conflict now in its third month, there will be no respite in energy prices in May either and are likely to add further upward pressures. While core inflation remains relatively moderate, the fact is higher energy prices will eat into consumer discretionary spending which will impact the broader economy and GDP.
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 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.
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 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.