Inflation bites into German wages

Real wages in Germany rose by 1.8 per cent last year, weaker than 2015, the Statistics Office said on Wednesday, as prices accelerated at a slightly higher rate.

The third yearly increase in a row is still good news for private consumption, which has become the main driver of growth in Europe’s biggest economy.

Moderate inflation and relatively strong increases in nominal wages, of 2.3 per cent, were cited by the office as the main reasons for the rise.

The increase in real wages last year was weaker than the 2.4 per cent rise in 2015 as prices accelerated faster.

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The consumer price index rose by 0.3 per cent in 2015 and by 0.5 per cent last year.

Economists expect rising inflation to slightly dent private consumption, which along with construction and government spending, has replaced exports as the main growth driver.

-Reuters