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Rising German inflation calls for ‘noticeable wage gains’, union chief says By Reuters

by Mike Robinson

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© Reuters. FILEPHOTO: ALDI’s customers purchase groceries at their food-discounter ALDI, while the spread of COVID-19 continues in Duesseldorf (Germany), April 29, 2020. REUTERS/Wolfgang Rattay/File Photo

BERLIN, (Reuters) – Rising inflation in Germany requires “clearly discernible real wage increases”, Verdi, the head of the service sector trade union Verdi stated in comments made on Thursday.

Inflation in Germany rose to 4.1% in September, the highest level since December 1993. This was due to an increase of energy and food prices.

Verdi chairman Frank Werneke said to RedaktionsNetzwerk Deutschland that because price rises for petrol and food affect those with low and medium incomes, his wage demands also include minimum wages so that increases on wage have an above-average impact on such workers.

Economists look for indicators that high inflation expectations could lead to higher wages, which could trigger a wage spiral. This would drive inflation higher and further reduce households’ purchasing power.

The European Central Bank monitors developments in inflation and wages both within the Euro Zone and Germany. Germany is also the bloc’s biggest economy.

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