German inflation probably eased in July, states data shows

BERLIN (Reuters) - Annual inflation in Europe's largest economy probably slowed in July, data from some German states suggested on Wednesday, probably pushing the euro zone rate lower and raising pressure on the ECB to take action.

Data from four states showed yearly inflation ranging from 0.6 percent to 1.0 percent - well below the European Central Bank's target for euro zone inflation of just below 2 percent.

That points to a lower German rate, signalling inflation in the 18-nation bloc will ease, especially after Spanish consumer prices fell 0.3 percent - more than forecast - in July.

Economists polled by Reuters before the states data was released had predicted the preliminary pan-German rate, due out at 1200 GMT, would show consumer price inflation slowing to 0.8 percent from 1.0 percent last month.

"A decline in the year-on-year rate from 1.0 to 0.9 or 0.8 would be well in line with what we've seen from the individual states so far," said Christian Schulz, senior economist at Berenberg Bank.

But he said it was uncertain how a bigger than expected monthly rise in consumer prices in some states would feed into the national rate, forecast at 0.2 percent.

In North Rhine-Westphalia (NRW), Germany's most populous state and traditionally a bellwether for the national data, price pressures were at their lowest level in almost four years, with consumer prices rising by 1.0 percent on the year after climbing by 1.2 percent in June.

Earlier on Wednesday data showed Spanish monthly consumer prices falling at their sharpest year on year rate in July since October 2009, even after economic growth hit its fastest since before the financial crisis in the preceding quarter.

Euro zone inflation is running at just 0.5 percent - in what the ECB calls the "danger zone" below 1 percent. Economists polled by Reuters expect the euro zone figure, due out on Thursday, to hold steady.

"If Germany and Spain go down, the euro zone inflation rate has a downside risk too ... It's clearly not good news for the ECB," Schulz said. "It could once again raise the discussion that more has to be done, rather sooner than later."

He said he did not expect the central bank to take action at its meeting next week.

(Reporting by Michelle Martin; Editing by Catherine Evans)