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  • Growth in Germany and France is stagnating
  • The economies of Spain and Italy are accelerating
  • Inflation data mixed

April 28 (Reuters) – Economic data across the euro zone on Friday showed a mixed picture for growth and inflation, potentially making the European Central Bank’s rate decision next week more difficult.

The euro zone’s two largest economies, Germany and France, stagnated or barely grew in the first three months of the year as a rise in exports was offset by a fall in domestic consumption by households and the government.

But the Spanish and Italian economies expanded more than expected, partly due to the same recovery in trade.

Inflation data was also unusually difficult to interpret, with headline rates rising in France and Spain, while price growth in most German states slowed or stabilized.

The ECB is due to raise interest rates on May 4, and policymakers will weigh another 50 basis point hike against the merits of slowing growth to 25 basis points.

“It’s a mixed bag of data with something for everyone,” said Karsten Brzeski, chief economist at ING.

“The ECB should not base its next policy decision on this batch of data,” he added, saying next Tuesday’s euro zone inflation reading and the Bank Credit Survey would be more important.

In a potential blow to the ECB, rising food prices in France and Spain showed some signs of easing.

Food prices have been the main driver of headline inflation in the 20 countries that use the euro in recent months, driven by higher fuel prices, unfavorable weather and some margin expansion by retailers.

Italy and especially Spain stood out for their economic growth rate.

Spain’s economic output in the first quarter increased by 3.8% year-on-year.

“All the growth is coming from the external sector, given the huge recovery in exports,” said Angel Talavera, an economist at Oxford Economics.

“The data puts us in the range of 2% growth this year if we manage to maintain this growth momentum and it is almost certain that we will see revisions to the growth outlook.”

Reporting by João Manuel Mauricio in Gdansk Editing by Inti Landauro

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Belen Carreno

Thomson Reuters

Reports on politics and economics in Spain. He is also an editor at Reuters Next. Has been a financial reporter and business editor for several media outlets for the past 20 years.

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