German spending has been strong ahead of a VAT rise

The fall across the 12-member group from June's headline 2.5% figure was a surprise, with recent data showing inflation rising in the US.

But the news is unlikely to sway the European Central Bank (ECB), which is expected to lift rates in October.

Its quarter point rise to 3% this month was its third increase this year.

Above the threshold

Policymakers are concerned about keeping a lid on inflation, as Europe's leading economies enjoy stronger growth.

Headline inflation is up from 2.2% this time last year.

This is just a marginal fall in inflation and it's not going to do anything to the ECB Holger Schmieding, Bank of America.

Price pressures from rising energy costs are the ECB's main concern, with inflation now persistently above its 2% target.

"This is just a marginal fall in inflation and it's not going to do anything to the ECB," said Holger Schmieding, from the Bank of America.

"The outlook is for inflation to stay above the 2% ECB threshold, due to the German value added tax rate hike next year, while the economic momentum is also very strong."

Inflationary pressures are a major worry for most leading industrialised economies.

US consumer prices rose 0.4% last month, twice their June increase, as petrol costs rose sharply.

UK inflation dipped slightly to 2.4% last month, but policymakers have warned that it could rise as high as 2.7% without further action.