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German wages beat inflation

November 29, 2013

After a decade of falling real wages, Germans’ purchasing power has started to increase over the past few years. In 2013, wage hikes are clearly outpacing inflation on the back of rising employment and a robust economy.

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Image: picture alliance/dpa

Monthly wages in Germany grew a staggering 2.5 percent between July and September compared with the same period last year, the German Federal Statistics Office, Destatis, announced on Friday.

The rise added to wage hikes of 3 percent and 1.9 percent in the preceding two quarters of 2013, and was substantially higher than the average inflation rate of 1.6 percent in 2013, Destatis said.

Germans average annual purchasing power was increasing for the third consecutive year, Destatis noted, following almost a decade of stagnating or even falling real incomes until 2010.

The highest wage increases in the third quarter came in the public sector, where they rose by almost 2.9 percent. This was followed closely by the manufacturing sector, where wages rose by about 2.8 percent.

Service sector workers, as well as those in the retail sector saw smaller gains of 1.7 percent and 1.9 percent respectively.

The rise in purchasing power led to higher retail sales in the first 10 months of 2013, Destatis data showed. The latest retail business figures, also released by German statisticians on Friday, showed an increase in sales by 1.5 percent between January and September.

The upward trend in 2013, however, was broken in September and October when sales dropped slightly. Nevertheless, retail business lobby group HDE said this didn't dent hopes for booming business around Christmas and a projected increase in whole-year sales by 1.2 percent over last year.

uhe/pfd (Reuters, dpa)