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German producer price inflation has hit the highest level in over five years as the country’s manufacturers cope with a surge in energy costs.

Official figures from stats agency Destatis show producer prices were 3.1 per cent higher in March 2017 than the same month last year, driven up primarily by the higher cost of oil which was 4.5 per cent more expensive last month. The monthly reading is the highest since December 2011 and leapt from 2.3 per cent in February.

A measure of cost pressures faced by factories, producer prices are a good early gauge of inflation building in an economy. Business usually pass on the higher cost of goods to consumers and have endured deflation across most of Europe of the last three years in the wake of a global commodity price slump.

Overall German consumer inflation fell back from four-year highs last month to 1.5 per cent from 2.2 per cent.

Copyright The Financial Times Limited 2017. All rights reserved.

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