BRUSSELS (Reuters) - Inflation rose more than expected in the euro zone in July, driven mostly by higher prices of food, alcohol and tobacco products, according to a first estimate from the EU's statistics agency released on Friday.
Eurostat said that inflation in the 19 countries sharing the euro increased to 0.2 per cent year-on-year in July from 0.1 per cent in June.
The figure defied market expectations, as economists polled by Reuters had expected inflation to remain at 0.1 percent in July, the same figure recorded in June.
Core inflation, which according to the European Central Bank's definition excludes the most volatile components of unprocessed food and energy, was unchanged at 0.8 percent, in line with market expectations.
Excluding energy, food, alcohol and tobacco products, the inflation rate remained stable at 0.9 percent.
A larger fall in energy prices than in June was offset by higher inflation in the other components of the indicator.
Energy prices dropped by 6.6 percent year-on-year, more than the 6.4 percent fall recorded in June.
But prices in food, alcohol and tobacco products went up 1.4 percent, much higher than the 0.9 percent rise in June. In the services sector, the largest in the euro zone economy, prices slightly rose 1.2 percent year-on-year, from 1.1 percent in the previous month.
Eurostat's flash estimate for the month does not include a monthly calculation.
(Reporting by Francesco Guarascio; Editing by Alissa de Carbonnel)