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Eurozone Core Inflation At 6-month High

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Eurozone's consumer price inflation accelerated more-than-expected in April to its highest level in five months, led by higher energy prices and service costs, and core price growth was the fastest in six months.

The consumer price index rose 1.7 percent year-on-year following a 1.4 percent increase in March, preliminary data from Eurostat showed on Friday. Economists had forecast 1.6 percent inflation.

Inflation was the highest since November, when prices rose 1.9 percent.

Core inflation, which excludes prices of energy, food, alcohol and tobacco, climbed to 1.2 percent from 0.8 percent. Economists had expected 1 percent inflation.

The latest core inflation figure was the highest since October, when it was the same 1.2 percent.

Energy inflation rose to 5.4 percent from 5.3 percent. Services costs grew 1.9 percent following a 1.1 percent increase in March.

Price growth in food, alcohol and tobacco slowed to 1.5 percent from 1.8 percent. Prices of non-energy industrial goods rose 0.2 percent following a 0.1 percent increase.

Easter and oil effects pushed up inflation in April, but the trend is still downwards, ING economist Bert Colijn said. In May, Easter effects will probably bring core inflation down considerably, he said.

"With selling price expectations falling, the ECB won't be too optimistic in how the pick up in growth in Q1 will translate into price growth, but will eagerly wait for more evidence ahead of the June meeting," the economist added.

Eurozone's quarterly economic growth rate doubled to 0.4 percent in the first three months of the year, while economists were unconvinced that the growth momentum would be sustained in the coming quarters as recent survey indicators such as new orders have been weak.

Separately, Eurostat reported that producer price inflation eased slightly to 2.9 percent in March from 3 percent in February. Economists had forecast 3 percent price growth.

Compared to the previous month, producer prices decreased 0.1 percent in March, reversing a similar size gain in the previous month. Economists had expected a 0.1 percent increase. Prices fell for the first time in three months.

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