German inflation rebounded in September, easing fears about a slowdown in the euro zone's largest economy.

The EU-harmonized consumer price index rose by 0.5% year-on-year, in line with forecasts, after price growth unexpectedly slowed to 0.3% in August.

The inflation rate was the highest since prices rose 0.6% in May 2015.

On the month, EU-harmonized prices were unchanged in September, according to preliminary figures from Germany's Federal Statistical Office. They had dropped 0.1% between July and August.

The unharmonized inflation rate accelerated to 0.7% from 0.4%, above predictions for 0.6% price growth as prices rose 0.1% month-on-month.

The recovery was led by a narrowing in the year-on-year decline in energy prices, which fell 3.6% after a 5.9% drop in August. Food price growth slowed and the year-on-year rise in the cost of services held steady at 1.3%.

While the German economy has outperformed most euro zone peers in recent years, the country's inflation rate has remained stubbornly below the European Central Bank's 2% euro zone target rate.

Friday's figures are the second major piece of German data out this week to temper concerns about waning German growth after news from the Ifo research institute on Monday that business confidence in September rebounded sharply.

Set against that were a disappointing German consumer confidence report and September purchasing managers' indices, as well as weak July industrial output and trade figures.

European stocks remained up after the German inflation figures, with the Dax recently up 0.76% at 10,518.12. The euro was recently up 0.06% against the dollar at $1.1224.

The Federal Statistical Office will release final September inflation data on Oct. 13.