German retirees' pensions will rise significantly this summer for the second consecutive year, the government said Monday, though the increase will still fall short of the current inflation rate.

The Labor Ministry said pensions will increase by 4.39% in the former West Germany on July 1 and by 5.86% in the formerly communist east. That will follow increases last year of 5.35% in the west and 6.12% in the east.

Rises in German pensions are linked largely to wage developments. Inflation has added to upward pressure on wages; salary negotiations in various sectors lately have seen high demands and in some cases hefty increases.

GERMAN PARLIAMENT EXTENDS HOLOCAUST PENSIONS

Germany's annual inflation rate stood at 8.7% in February, unchanged from January.

The latest pension increase falls short of that. But it will finally bring pensions in the less prosperous east up to the level of those in the west, which is home to most of Germany’s population, after years of efforts to narrow the gap.