The euro zone's annual inflation rate dropped to 0.4 percent in July, from 0.5 percent in June, the European Union (EU) statistics office Eurostat said on Thursday.

The largest upward impacts to euro area annual inflation came from restaurants and cafes, rents, and maintenance of vehicles, while fruit, vegetables and telecommunications had the biggest downward impacts.

Meanwhile, the 28-member EU's annual inflation was 0.6 percent in July, down from 0.7 percent in June.

The figure was well below the European Central Bank's (ECB) target of 2 percent.

Among the 28 member states, the annual inflation fell in 13 countries, remained stable in six and rose in eight.

The highest negative annual rates in July were observed in Bulgaria and Greece, while the highest annual rates were recorded in Austria and Romania.

The euro zone's price growth has been below 1 percent since last October.

The ECB said growth of consumer price inflation below 1 percent represents a danger to the economy because of deflation. The ECB on Thursday left its key interest rate unchanged at 0.15 percent.

Mario Draghi, head of the ECB, predicted that a weak recovery in the euro zone would continue and longer-term inflation expectations remained anchored to the central bank's target of below but near 2 percent, according to local media.