THE average price of a new car across Europe has risen for the first time in four years - with Denmark experiencing the biggest increase.

In the UK, prices were 4% higher than the average for Western Europe and 6% higher than the average for the euro currency as a whole.

In Denmark, prices increased by 7.9% during the 12 months to June, according to figures produced by PricewaterhouseCoopers and eurocarprice.com in the Index of New Car Prices. The weakest price movement was in Hungary, where retail prices fell by 1.8%.

The Index also compares pre-tax prices and found that the average pre-tax price of cars in Western Europe were up by 1.9% in the year to June.

UK pre-tax prices were 9% higher than the average for Western Europe and 11% higher than the average for the euro currency zone. The UK prices increased by 3.1% during the first six months of the year.

Shaun Pitt, automotive partner at PricewaterhouseCoopers, said: 'There is increasing evidence that pre-tax car prices are harmonising within the eurozone. However, vastly differing national tax regimes continue to inhibit convergence of tax-included retail prices. Outside Euroland, exchange rate movements prevent any possibility of price harmonisation at either pre or post-tax levels.' In terms of segment variation, the lower medium segment showed the largest increase in average pre-tax prices in Western Europe during the 12 months to June, increasing by 9.6%.

The small sector was up by 4%, the upper medium up by 5.1% and the executive sector by 8.4%. Robin Goodyer, operations director of eurocarprice.com, said: 'The increase in manufacturers' pre-tax prices last month was the largest since eurocarprice.com began monitoring prices in 1998. 'Three factors are fuelling the price rise: higher sales of more expensive MPVs and SUV, pricier new models in the volume segments and the carmakers' need to compensate for falling revenue while the German and French car markets continue to decline.'