FRANKFURT, Germany (AP) — The European economy scraped out meager growth of 0.1% in the first three months of the year, barely gaining momentum after dodging a winter recession as challenges persist from inflation that corrodes people’s willingness to spend.

Industrial activity has picked up, and China’s reopening from COVID-19 restrictions boosted the outlook for global economy. The mild weather also allowed an early start to construction activity.

But inflation is holding back consumer spending, with wage increases only partly offsetting how much more people have to pay for groceries, clothing and more. Interest rate increases by the European Central Bank aimed at getting inflation under control will also weigh on growth by making credit more costly for purchases or business investment.

Annual inflation in the eurozone fell to 6.9% in March from 8.5% the month before but is well above the ECB’s goal of 2% considered best for the economy. The bank is likely to deliver another rate increase at its policy meeting Thursday.

While modest expansion is “putting the worries of a winter recession definitively to bed,” more persistent inflation will weigh on growth throughout the year, said economist Nicola Nobile at Oxford Economics.

“We expect the eurozone to plod along in the coming quarters in the absence of a strong growth driver, rather than jump-starting a strong expansion,” Nobile said.

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