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German Producer Price Inflation Sinks

German producer price inflation dropped to its lowest level in more than two years last month, helped by lower oil and energy prices, according to government figures released Tuesday.

Producer prices -- a measure of price pressures at the factory gate, seen as an important gauge of inflation before it reaches consumers -- were up 2.8% from February 2006, the Federal Statistics Office said.

That was the lowest reading since December 2004, when producer prices were up 2.9%, the office said. It compared with annual inflation of 3.2% in January and 4.4% in December.

Prices of oil products were 3.2% lower in February than a year earlier.

The statistics office said producer prices were up 0.3% in February compared with the previous month.

Inflation data from Germany, Europe's biggest economy, are important to interest rate decisions by the European Central Bank.