(Adds details on pay dispute, background on German inflation)
DUESSELDORF, Germany, March 6 (Reuters) - A pay dispute in Germany's steel sector intensified on Monday as the IG Metall union rejected an offer for a wage increase of 1.3 percent and called for labour strikes in northwest Germany on Tuesday.
An estimated 3,000 steelworkers will take part in the strikes on Tuesday, and among the companies affected by the walkouts will be Thyssenkrupp Steel Europe in the western city of Duisburg, an IG Metall spokesman said.
Vibrant domestic demand has replaced exports as the main driver of growth in Europe's largest economy and strong pay rises would help keep growth in private consumption on track as higher inflation eats into Germans' spending power.
IG Metall has demanded a 4.5 percent pay rise over 12 months for the 72,000 steelworkers in northwest Germany, where the vast majority of the country's industry is concentrated.
During the second round of negotiations, employers offered an increase of 1.3 percent over 15 months, the union said.
German annual inflation jumped to 2.2 percent in February, reaching its highest in 4-1/2 years and surpassing the European Central Bank's target for price stability.
"An offer that is below the inflation rate and leads to a drop in real wages is out of the question and not negotiable," IG Metall chief negotiator Knut Giesler said, describing the employers' offer as measly.
"Therefore it's the employers who bear responsibility for the escalation of the labour dispute," Giesler added.
Under the last deal, which ran out at the end of February, steelworkers got 2.3 percent more pay from January 2016.
Both sides are expected to resume negotiations on March 16.
Needing to cut costs and reduce overcapacity, ThyssenKrupp and India's Tata Steel have been in talks since last July about a potential merger of their European steel assets.
Workers in other industries have been pushing for pay rises.
In February, Germany's 16 federal states agreed with trade unions a two-stage wage increase of 4.35 percent over two years for more than two million civil servants and other public sector employees.
Last week, IG Metall and employers agreed a 4.4 percent pay rise for 100,000 workers in the west German textile and clothing industry, the latest sector in Europe's largest economy to grant employees a solid increase. (Reporting by Tom Kaeckenhoff; Writing by Michael Nienaber; Editing by Maria Sheahan/Keith Weir)