Euro area prices fell 0.7 pct in year to July

LONDON — Prices in the 16 countries that use the euro fell on an annual basis for the second straight month in July and by more than previously anticipated, official figures showed Friday.

The European Union’s statistics office Eurostat said consumer prices in the euro zone fell by 0.7 percent in July from the previous year, 0.1 percentage point more than it had previously estimated and ahead of June’s 0.1 percent fall. The monthly decline was also 0.7 percent.

Eurostat said the biggest drops were recorded in Ireland and Belgium.

It said a 5.5 percent decline in transport cost, related to lower year-on-year energy prices, was the main influence behind the further fall in overall prices. A year ago, oil prices were trading at an all-time high of around $147 a barrel, compared with the July average rate of around $65.

The only members of the euro zone to post rising prices in the year to July were Greece, Malta, Slovakia and Finland.

Germany, the euro zone’s largest economy, saw prices fall by 0.7 percent in the year to July.

Friday’s figures are unlikely to cause too much concern at the European Central Bank, which has predicted a short period of negative inflation.

Analysts have also noted that the downward pressure coming from oil prices will disappear in the months ahead as last year’s sharp increases drop out of the annual comparison. But they have warned that the stuttering euro zone economy may continue to keep prices weak despite surprise figures Thursday showing that the recession in Germany and France ended in the second quarter.

In particular, higher unemployment lowers the ability of workers or unions to negotiate big wage increases — and with a time lag between rising unemployment and wages, this downward pressure on inflation may continue for a long time to come.

The EU as a whole, including countries that don’t use the euro such as Britain and Sweden, saw prices rise by 0.2 percent, down from 0.6 percent in June.

The EU rate has remained positive, partly because Britain’s inflation remains positive despite recent falls, and because many of the East European countries not in the euro zone continue to have relatively high inflation rates. Romania, for example, had inflation of 5 percent in July, while Poland’s stood at 4.5 percent.