German inflation dips slightly in November to 10%

FILE -- An employee in protective clothing takes a sample from the furnace at the steel producer, Salzgitter AG, in Salzgitter, Germany, Thursday, March 22, 2018. Germanys biggest industrial union has agreed with employers on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of sky-high inflation. (AP Photo/Markus Schreiber,file) (Markus Schreiber, Markus Schreiber)

BERLIN – German inflation slipped back slightly to 10% in November, official figures showed Tuesday, but galloping prices remain a major headache for Europe's biggest economy.

The annual inflation rate was off its peak of 10.4%, reached in October, as the increase in energy prices over a year ago slowed to 38.4% from 43% a month earlier, the Federal Statistical Office said. But there was no let-up in the increase of food prices, which ticked up to 21% from 20.3%.

The German economy grew 0.4% in the July-September period compared with the previous quarter thanks to consumer spending. But it is still expected to shrink in the current fourth quarter and the first three months of next year.

A separate report from the statistical office on Tuesday showed that real wages in Germany declined by 5.7% in the third quarter compared with a year earlier. It said the value of a 2.3% increase in nominal earnings was more than erased by an 8.4% rise in consumer prices. It was the fourth consecutive quarter in which real wages have declined.

Chancellor OIaf Scholz has sought to find ways with unions and employers to address the impact of rising prices while preventing an inflationary spiral.

In mid-November, Germany’s biggest industrial union agreed with employers on a pay deal that will see millions of workers get raises totaling 8.5% over two years as well as one-time payments meant to cushion the effect of inflation.

Scholz has been eager to promote such tax-free payments of up to 3,000 euros ($3,100), which help workers offset rising costs without pushing up nominal wages.