The annual rate of inflation across the euro area eased back to 10% in November, according to an initial 'flash' estimate from the EU’s statistical agency Eurostat.
This compares to an annual rate of 10.6% recorded in October and is the first fall in the rate of inflation in 17 consecutive months.
The main contributor to inflation remains the cost of energy, but the annual rate of energy price increases slowed last month to 34.9%, down from 41.5% in October.
However, food inflation accelerated slightly to 13.6% from 13.1%.
The rate of inflation for industrial goods and services remained steady.
Core inflation, which strips out energy and food prices, also remained steady at an annual rate of 5%.
Ireland’s estimated harmonised index of consumer prices also fell back to 9% from an annual rate of 9.4% in October.
According to a statement from the Central Statistics Office, the energy component of Ireland's 'flash’ estimate of inflation rose by 0.1% last month and slowed to an annual rate of 43%.
This compares to a jump in energy prices in October of 13.6% and an annual rate of energy price inflation of 47.6%.
The CSO will publish the Consumer Price Index for November next week.
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The European Central Bank meets later in December when it's expected to raise interest rates again. Speculation continues over whether that rate rise will be 0.5% or 0.75%.
With inflation running at more than five times its 2% target, the ECB has raised interest rates at its fastest pace on record this year and a string of hikes over the coming months is still likely as price growth will take years to tame.
But after back-to-back 75-basis-point moves, some policymakers have recently made the case for a 50 bp rise on 15 December, arguing that inflation is finally peaking and that the ECB has made enough progress to justify more modest steps.
While the dip in headline prices, the euro zone's first in well over a year, strengthens the case for more measured ECB action next month, Wednesday's data could also fuel fears that inflation will prove more persistent than expected.
Underlying price growth, excluding volatile food and energy prices, remained high, which is likely to trigger warnings from conservative central bankers, while food price growth, a key concern for governments, shows little sign of peaking.
Filtering out food and fuel costs, inflation rose to 6.6% from 6.4%, defying expectations for a drop, while an even more narrow measure that also excludes alcohol and tobacco held steady at 5.0%.
Inflation for processed food, alcohol and tobacco, a key category, meanwhile accelerated to 13.6% from 12.4%.
Another complication is that economic growth is not suffering as much as some had anticipated, so the deflationary impact of a looming winter recession is likely to be more modest than once thought.
Initially fuelled by supply bottlenecks in the post-pandemic reopening, inflation is now driven by soaring food prices after a poor harvest and sky-high energy costs in the fallout of Russia's war in Ukraine.
It may still edge back up in the coming months, especially at the turn of the year when energy contracts get repriced, but it is likely to decline through 2023 and return to the vicinity of 2% by the end of 2024.
Such a rapid decline lacks historical precedence, some policymakers warn, suggesting that today's small decline is unlikely to be a game-changer for where rates end up over the cycle of monetary tightening.
Additional reporting by Reuters