Euro zone producer prices fell more than expected in August, underlining the challenges for the European Central Bank to push the region's headline inflation rate towards its target.

The EU's statistics agency, Eurostat, said producer prices fell by 0.2% from July, above the 0.1% decline analysts had predicted, and compared with a 0.3% deterioration in July. (Eurostat on Tuesday revised that figure lower from an initial estimate of a 0.1% decline). On the year, prices were down 2.1%, less than the annual price plunge of 2.6% in July.

On the month energy prices fell by 0.8%, while prices of capital goods and durable consumer goods held steady, as did industrial prices excluding energy. Consumer non-durable prices rose by 0.1%.

The report follows a preliminary report on Friday for September that showed euro zone inflation had accelerated to a near-two-year high of 0.4% from 0.2% in August.  The ECB remains far away from attaining its 2% inflation target and many analysts believe it has left the door open for new monetary maneuvers before year-end as it seeks to spur economic and price growth.

Capital Economics European economist Jack Allen noted on Friday that a fading impact from lower energy prices will push headline inflation towards the 2% target in coming months. But he said that since core price pressures, including wage growth, remain subdued, inflation will then fall back.

The euro was recently down 0.43% against the dollar at $1.1163

European stocks were up on Tuesday, with the Dax up 0.74% at 10,588.39.