German producer prices up again

Germany companies have been hit by higher energy prices

Germany has seen the fastest increase in producer prices for nearly 24 years, adding to fears about inflationary pressures in Europe's biggest economy.

Prices paid by German firms for industrial products went up 6.1% compared with a year earlier. On a monthly basis, prices rose 1%.

Big rises in energy prices and raw material costs are largely to blame.

"Industry consumers had to fork out substantially more [for energy]," said the Federal Statistics Office.

Energy prices increased by 20.4% over the year, or 2.3% in April compared with the previous month.

In particular, it was natural gas which saw dramatic increases compared with April 2005.

There is a risk that higher energy prices could be passed on by producers to consumers, making final products more expensive.

Market analysts believe the figures make it more likely that the European Central Bank will raise interest rates next month.

"The data today are another part of the puzzle for the European Central Bank, which is expected to raise the interest rate by 25 basis points in June," said Klaus Schruefer at SEB bank.