Euro zone July consumer prices fell by a larger-than-expected 0.2 per cent from the previous month for a revised 2.3 per cent increase from a year earlier, the European Union statistics office said today.
Economists had expected the July inflation rate to be unchanged from an initial Eurostat estimate of 2.4 per cent and forecast a monthly decline in prices of 0.1 per cent.
Inflation hit a two-year peak of 2.5 per cent in May due to rising fuel costs but has since eased back towards the European Central Bank's target of keeping the annual change in the prices paid by euro zone consumers close to but below two per cent.
While oil prices remain high, the latest euro zone inflation data should help assuage concern that higher prices risk crimping euro zone growth.
Consumer prices fell in July as the cost of clothing tumbled by 6 percent compared with June and food prices by 0.5 per cent over the same period.
These drops more than offset monthly increases in prices charged by hotels and restaurants, which rose 1.0 percent.
The core rate of inflation referred to by the ECB, which excludes volatile energy and unprocessed food costs, was 2.1 percent in July. Like the headline figure, that was down from June, when it was 2.2 per cent.
Energy prices rose 0.6 percent on a monthly basis and by 5.9 per cent year-on-year. Fuels for transport had the biggest upward impact on the headline inflation rate, boosting it by 0.28 percentage points.