Across four major German states, consumer prices saw a definite increase for the month of December as compare to last year, mainly on the back of high energy costs.

As confirmed by official figures released today by the statistics office in Dusseldorf, inflation rate across North Rhine-Westphalia hiked to 0.8% from last month's figure of 0.4%. In Brandenburg as well, consumer prices surged to 0.7%, while those in Hesse and Saxony increased 0.8%.

Over the past year, prices of crude oil have almost doubled, which has had a negative impact on confidence just as the economy is coming out of one of the worst recessions the world has ever seen. Although the German economic growth started successfully by the year's third quarter, the low rate of unemployment has continued to hurt consumer confidence.

As per the Bundesbank's beliefs, the German inflation rate will stay benign for the month, and unemployment is predicted to record a rise to hit 10.1% by 2011, from today's 8.1% figure.

"On the year, inflation rates are still driven by energy prices. However, inflation pressures will remain extremely subdued over the next year", said Karsten Junius, a senior economist at Dekabank in Frankfurt.