The euro zone data follow some disappointing figures on Wednesday, which saw Spain slide into deflation - where the growth in consumer prices turns negative and begins to fall. Germany - considered to be the powerhouse of the region - saw its rate of inflation slow to 0.8 percent, following on from last month's reading of 1.0 percent.
Analysts at BNP Paribas called the flash reading a "new cyclical low" and said they expected it to remain around current levels over the next couple of months, with risks tilted to the downside.
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The European Central Bank (ECB) sees inflation as a key metric in gauging the state of the euro zone, and announced a slew of measures back in June to try to spur on the region's flagging economy. Many analysts fear deflation could lead to a downward spiral, with consumers holding off on purchases in the expectation that prices could fall further. Others see deflation as a natural rebalancing within the region, believing that consumer prices need to slide to counterbalance an overly-strong euro.
Mario Greco, CEO of Italian insurance company Generali, told CNBC on Thursday that the euro zone is "probably" already in state of deflation.
"The European situation is quite concerning," he said. "I mean the labor situation in all of Europe, you know, is not moving. It's not moving good at all."
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Some have accused the ECB of acting too late to tackle the risk of deflation, with most of its stimulus measures not expected to kick in until later this year and little chance of the central bank announcing new measures in the meantime.