Energy costs hit German factories

Firms are being hit by higher energy costs

Rising energy costs meant German producer prices were 5.2% higher in April than a year earlier, official figures have shown.

The rise was the largest annual rise since August 2006. Prices were up 1.1% from the previous month.

Industry is being squeezed as oil prices keep hitting new records - most recently to nearly $128 a barrel.

A separate survey showed German investor confidence edged down in May, amid worries over quickening inflation.

The ZEW institute's gauge of expectations fell to -41.4 points in May after standing at -40.7 in April.

"On the one hand, economic expectations for the next six months for the US and consequently also for the German export industry have increased considerably," said the ZEW institute.

"On the other hand, inflationary risks remain high. This should negatively affect private consumption in Germany," it added.

The producer price rise in April stemmed largely from a 12.6% increase in energy prices. Within that, the price of heating oil was up 54.6% while diesel fuel rose by nearly 20%.

Excluding energy, producer prices rose 2.7% year-on-year.

Other areas to see sharp rises included the cost of animal feed and fertilizer, which climbed by 60%.