Spain’s gross domestic product rose at its fastest quarterly pace in six years in the first quarter while inflation accelerated, in the latest sign the country’s economy is picking up steam after years of recession.

Economic output rose 0.4 per cent on a quarterly basis, double that reported in the final three months of 2013.

Year on year, the economy expanded a greater-than-expected 0.6 per cent, the sharpest increase in three years, National Statistics Institute data showed today.

European-Union harmonised consumer prices meanwhile, which in March shrank 0.2 per cent, rose 0.3 per cent year on year in April, as expected.

That may serve as a pointer for euro zone inflation numbers due later in the morning, which are expected to show a rise to 0.8 per cent from 0.5 per cent in March, easing pressure on the European Central Bank to act against deflationary trends.

While Spain’s economic output and consumer prices pointed to a return to growth, however, weak domestic demand continued to weigh on hopes of a sustained recovery, with retail sales falling 0.5 per cent in March, the largest drop since December.

“Retail sales were very weak, and that’s a little worrying,” said economist at Citi Jose Luis Martinez. “They may reflect the continuing weakness of domestic demand, and suggest that the second quarter will growth less than in the first. We’ll have to wait until GDP breakdown to see what happened.”

The statistics institute reports final gross domestic product data on May 29th.

Spain emerged from recession in the second half of 2013 - its second since 2008 after a burst property bubble crippled the economy and left millions out of work.

Its unemployment rate, the second highest in the euro zone after Greece, rose in the first quarter as the workforce shrank.

Massive unemployment has weighed heavily on Spanish domestic demand, worth over two thirds of economic output. Spain is the first euro zone country to report first quarter GDP figures.