Hard-pressed German consumers were given some relief yesterday with the news that inflation dropped to just 1.1 per cent in November. The Federal Statistics Office in Wiesbaden said the drop, down from 1.3 per cent in October, was a result of cheaper fuel, food and package holidays. From Derek Scally, in Berlin

But the news will be cold comfort to Germans after 12 months of real and imagined price hikes, known in Germany as the "teuro" phenomenon: a play on the euro and teuer, the word for expensive.

The two-to-one conversion rate from deutschmark to euro made it clear to consumers that many retailers had used the changeover to raise prices.

But inflation data in January and February showed no larger rise than usual, suggesting that the phenomenon was partly anecdotal and partly the result of prices rises on day-to-day items, which carry a lesser weighting in inflation calculations. The lower-than-expected inflation in November was driven by a 3.8 per cent drop in petrol prices and a 9.8 per cent drop in the price of home heating oil, according to the statistics office.

Cigarettes continue to drive up prices in Germany, with a rise of 5.7 per cent since the start of the year. Other above-average rises of 3.4 per cent were recorded in the price of a haircut and visits to cafes and restaurants.

It has been a disastrous year for Germany's retail and gastronomy sector.

Trade has dropped by at least 10 per cent, according to retailer associations, with discount supermarket chains like Aldi and Lidl the only retailers reporting a boom in trade.

Today the cabinet will discuss draft proposals to liberalise Germany's restrictive trading hours under which shops shut at 8 p.m. on weekdays and 4 p.m. on Saturday, with no Sunday trading except at train stations.

The proposal, recommending six-day shopping until 10 p.m.