Euro zone economy accelerates, but prices fall more than expected

Reuters

Published Apr 29, 2016 05:18AM ET

Euro zone economy accelerates, but prices fall more than expected

BRUSSELS (Reuters) - The euro zone economy accelerated more than expected in the first quarter, preliminary data showed on Friday, but consumer prices also dropped by more than forecast in April because of a steep fall in energy costs.

The European Union's statistics office Eurostat said gross domestic product in the 19 countries sharing the euro rose 0.6 percent quarter-on-quarter in the January-March period, up from 0.3 percent growth in the previous three months.

Economic polled by Reuters had expected quarterly growth of 0.4 percent. On a year-on-year basis, euro zone GDP rose 1.6 percent in the first quarter, beating expectations of a 1.4 percent increase.

Eurostat does not provide a detailed breakdown of the numbers in its first GDP estimate.

Meanwhile, consumer prices fell 0.2 percent year-on-year in April, Eurostat said, after holding flat in March, a steeper drop than the consensus forecast for a 0.1 percent decline.

Falling energy prices, which tumbled 8.6 percent year-on-year in April, were the main drag on the overall index, while unprocessed food was the main positive, rising 1.2 percent.

Without those two most volatile items, in a measure that the European Central Bank calls core inflation -- consumer prices rose 0.8 percent year-on-year in April, less than the 1 percent increase in March.