Inflation in the 15 countries sharing the euro pulled back in August from a record high, offering an increasingly rare ray of light as the economy loses pace, official EU data showed on Friday.
Annual inflation in the euro countries fell to 3.8 percent from a record 4.0 percent in July amid cooling oil prices, according to a first estimate from the Eurostat data agency.
With oil trading at record highs close to 150 dollars a barrel, annual consumer price inflation in the eurozone had reached in July the highest level since the euro was formed in 1999.
However, since then, oil prices have gradually declined to about 117 dollars a barrel in morning trading in London on Friday, raising hopes that inflation may have passed its peak.
"We are confident that the peak in euro-area inflation took place in June-July at 4.0 percent," Lehman Brothers economist Laurent Bilke said.
The fall in inflation will bring welcome relief to consumers and businesses alike as both struggle with fast deteriorating economic conditions.
Driven by soaring oil and food prices, high inflation has pinched consumers' purchasing power and businesses' margins, putting additional strain on them just as they tried to cope with a weaker economy.
Separately, a European Commission survey found that confidence in the eurozone economy fell in August to the lowest level in over five years, although consumers' outlook improved marginally.
Following in the path of other recent weak data, the European Commission's eurozone economic sentiment indicator eased in to 88.8 points from 89.5 points in July.