German consumer prices, harmonised to make them comparable with inflation data from other European Union countries, fell 0.4% year-on-year after shrinking by 0.1% in the previous month, the Federal Statistics Office said.

This compared with a Reuters forecast for a 0.1% decline and was the lowest reading since January 2015.

"The inflation rate is influenced, among other things, by the VAT cut that came into effect on July 1, 2020," the office said in a statement.

On the month, harmonised prices also fell by 0.4%. A Reuters poll had predicted a 0.1% drop.

The European Central Bank has a target of keeping inflation close to but below 2% in the euro zone.

(Reporting by Michael Nienaber; editing by Thomas Seythal)