Euro zone inflation unexpectedly rose in June but underlying price pressures dropped again, underscoring fears that consumer price growth will remain anaemic for years as the bloc recovers from the biggest recession in living memory. 

Annual inflation in the euro zone accelerated to 0.3% in June from a four-year low of 0.1% in May.

The reading was better than forecasts for no change and supported the European Central Bank's expectation that a negative reading may be avoided. 

Excluding volatile food and energy prices, a key measure watched by the ECB, inflation eased to 1.1% from 1.2%.

An even narrower gauge of inflation, which also excludes alcohol and tobacco, fell to 0.8% from 0.9%, data from Eurostat, the EU's statistics agency showed today. 

The ECB targets inflation at 2% but has already missed this for seven years and expects to undershoot at least through 2022 as a coronavirus-induced recession raises unemployment, dampens consumption and depresses wage growth. 

Today's figure may still offer mild comfort to the ECB that the rapid decline in inflation, also fuelled by crashing oil prices, may be over, even if any rebound in price growth is still unlikely until next year. 

Policymakers had hoped massive government wage subsidies which limited income losses for households plus super easy monetary policy would limit the damage to the economy and prop up confidence enough to prevent a dangerous deflationary spiral. 

But ECB projections suggest inflation could stay at or near zero for the rest of 2020 and only pick up in the second quarter of 2021. 

Energy prices were down 9.4% year on year in June, following an 11.9% plunge in May, while unprocessed food prices were 5.9% higher after a 6.7% increase in May. 

Inflation in services dropped to 1.2% from 1.3%, today's figures also show.