High energy costs lifted German producer price inflation to its fastest annual rate in four years in April to outstrip analysts' expectations.
Data from the Federal Statistics Office today showed that year-on-year, factory gate prices rose by 4.6 per cent, the biggest increase since a 4.9 per cent gain in April 2001.
From March, prices climbed by 0.7 per cent, which was the fifth consecutive monthly rise and the biggest since January.
"The continuing rise in energy costs was chiefly responsible for the further increase in producer prices," the office said in a statement, adding energy costs had risen by 3.6 per cent on the month and 13.2 per cent from a year earlier.
Data on Tuesday showed that producer prices in the United States rose by a bigger-than-expected 0.6 per cent in April, also partly owing to increased energy costs.
SEB economist Klaus Schruefer in Frankfurt was surprised by the sharpness of the German rise and said the European Central Bank would see the data as a vindication of its decision to resist calls from some quarters to cut interest rates.
"These developments lend further weight to the view that the ECB will raise rates slightly once there are clear signs of an economic pick-up in the euro zone," he said.
However, he noted that with growth in the 12-nation bloc still sluggish and recent leading indicators offering little prospect of a significant turnaround soon, a rate rise was not likely to happen before next year.