German inflation drops to lowest level in four years

Inflation in Germany, Europe's biggest economy, fell in July to its lowest level in over four years, official data showed on Wednesday. Confirming a flash estimate released at the end of last month, the federal statistics office Destatis calculated that German inflation this month dropped to 0.8 per cent year-on-year, its lowest level since February 2010, after rebounding to 1.0 per cent in June. Inflation has been unusually low across the 18-nation eurozone, fuelling concern the region could slip into deflation: a sustained and widespread drop in prices that hampers economic activity and threatens job losses. Using the Harmonised Index of Consumer Prices (HICP) -- the yardstick used by the ECB -- inflation in Germany stood at 0.8 per cent in July, far below the bank's annual inflation target of just below 2.0 per cent, according to AFP.