German producer prices rose at the quickest annual rate in three years in August, boosted by record high mineral oil and steel costs, Federal Statistics Office data showed on Friday. Prices advanced by 0.3 percent month-on-month and by 2.2 percent year-on-year, the biggest annual gain since an increase of 2.7 percent in August 2001, the Office said. In July, prices rose 0.6 percent month-on-month and by 1.9 percent year-on-year. Joerg Lueschow, an economist at WestLB in Duesseldorf, said the increase in factory gate prices in August was slightly less than he expected and predicted a weakening of demand for oil in coming weeks. He said West LB was forecasting consumer prices, expected to be released at the end of next week, to show a 0.2 percent month-on-month decline in September as package holiday prices fall, helping reduce the annual rate of inflation to 1.9 percent from 2.0 percent. The Statistics Office said on Friday that mineral oil costs advanced by 3.6 percent in August from July and by 12.2 percent from the same month a year earlier, while rolled steel prices gained 1.5 percent on the month and 29.1 percent on the year.
"As in previous months, general price developments were dominated by two fundamental tendencies: on the one hand prices for mineral oil products clearly rose again in August, while on the other the increase in steel prices seen since the beginning of the year continued," it added. Excluding volatile oil, producer prices were up 1.6 percent year-on-year after a 1.5 percent gain in July. Among products that posted price declines in August, electronically integrated circuits dropped 12.4 percent, data processing devices fell 9.6 percent and glues and gelatine declined 7.1 percent.///