German producer-price inflation (PPI), an early indicator of price pressure in an economy, dropped to its lowest level in more than two years in March, according to official data released Thursday.

The index of producer prices for industrial products (domestic sales) rose by 2.5 percent from a year ago, the lowest year-on-year increase since September 2004, the Federal Statistics Office said in Wiesbaden.

Economists had expected a rate of 2.7 percent for March.

The office said that in February and January, the annual rate of producer prices was up 2.8 percent and 3.2 percent respectively. Compared with the previous month, the index rose by 0.3 percent in March.

Analysts said that an 18-percent drop in oil prices from July has helped keep inflation below the European Central Bank's 2-percent ceiling for seven straight months.