Eurozone inflation falls to 5.3% behind declining energy prices

July 31 (UPI) -- Consumer inflation in the euro area continued its downward track in July, slowing by 0.2% to 5.3% largely due to ongoing sharp drops in the price of energy, the European Union's main statistical agency said Monday.

The price of energy fell even faster than in June posting a decline of 6.1%, up from 5.6%, but the slowdown in annual inflation was limited by continuing high food, alcohol and tobacco inflation which came in at 10.8% for July, non-energy industrial goods at 5% and services which rebounded to 5.6%, flash estimates from Eurostat show.

July was the second straight monthly fall following a 0.6% slowing of the pace at which prices were rising in June, down from 6.1% in May, however, critical core inflation -- which strips out the prices of volatile items such as food and energy -- remained unchanged at 5.5%.

Seventeen of the 20 countries that use the euro saw declines in inflation -- the pace at which prices are rising -- with Greece, Spain and Luxembourg the exceptions. The countries with the highest inflation rates were Slovakia at 10.2%, Croatia at 8.1% and Lithuania at 7.1%.

The inflation numbers coincided with data showing the euro area economy returned to growth in the second quarter posting a 0.3% expansion of GDP after two-quarters of negative growth in the October to December and January to March periods, with Spain, Portugal and Ireland posting strong GDP growth numbers.

The economies of the Czech Republic, Latvia, Austria, and Germany, by contrast, all contracted and economic growth in the 27-member-country EU as a whole was stagnant.

The latest estimates come three days after the European Central Bank hiked interest rates by 25 basis points to 3.75% as ECB President Christine Lagarde said inflation was "still expected to remain too high for too long."