(Oct 20): German producer prices rose at their fastest pace in three and a half years in September, the federal statistics office said on Tuesday, driven by higher energy prices due to the conflict in the Middle East.

Prices charged by manufacturers for goods ranging from food to industrial products increased by 6.7% on the year, while analysts polled by Reuters expected a 6.2% increase.

It was the strongest increase since March 2023 and an acceleration from the 4.6% recorded in August.

"There continues to be significant price pressure at the upstream level," said Alexander Krueger, chief economist at Bank Bethmann HAL.

The annual rate is likely to rise towards 10%, Krueger said. "Sooner or later, this is also likely to push up consumer prices."

On the month, producer prices rose 1.9%.

Producer prices measure costs at the factory gate before goods reach wholesalers and retailers and are seen as an early indicator of future inflation.

The primary driver of the price increases was a 14.9% annual rise in energy prices. Intermediate goods were up 6.4%.

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