(Adds economists' comments)
By Jan Strupczewski
GOTHENBURG, Sweden, Sept 30 (Reuters) - Euro zone consumer prices fell this month by more than economists had expected, reinforcing expectations the European Central Bank will not raise interest rates yet despite a nascent economic recovery.
Prices in the 16-country area fell 0.3 percent year-on-year in September, the European Union statistics office said in an estimate released in Luxembourg. They had dipped 0.2 percent in August, 0.7 percent in July and 0.1 percent in June.
Economists polled by Reuters had on average expected a 0.2 percent fall in September.
"This is probably a temporary relapse, mainly related to food- and energy-price base effects," said Martin van Vliet, economist at ING.
"Headline inflation will likely turn positive again in November and edge up further going into 2010, as the earlier sharp drop in oil and food prices increasingly drops out of the calculation," he said.
The ECB wants inflation to be just below 2 percent. It says it does not expect deflation -- which it defines as prolonged price falls accompanied by expectations of more declines -- because the current drops in prices are mainly a result of the record high cost of oil a year earlier.
With survey and hard data signalling the euro zone is likely to have emerged from recession in the third quarter, markets are speculating when the ECB might start tightening policy after cutting borrowing costs to 1 percent earlier this year.
A monthly consumer survey by the European Commission showed on Tuesday that inflation expectations among households and companies rebounded from all-time lows in September after six months of falls.
But economists said that even once prices started growing again, the rises would be small because firms continued to compete for market share at a time of weak demand.
"The most likely scenario, in our view, is that inflation will also remain below the ECB's target of below but close to 2 percent in 2011. The benign inflation outlook means the ECB has plenty of time left before it needs to start reversing monetary stimulus," van Vliet said.
Economists now expect the bank will not raise rates until the third quarter of 2010.
A detailed breakdown of the inflation estimate and month-on-month data will be available on Oct. 15. (Reporting by Jan Strupczewski; Editing by Dale Hudson)