Commodity prices retreat

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news that apart from coal, almost all commodity prices are falling today. Market recession rears are behind the retreats.</p><p>But first, the latest <a href="http://www.redbookresearch.com/" target="_blank"><strong>weekly update of American retail sales</strong></a> shows it bubbling higher at a very good pace, well ahead of inflation. This index reports a +13% rise year-on-year, before price adjustments.</p><p>But a good proportion can be attributed to inflation. Americans don't see it as transitory at all now, in the short-term at least. The latest <a href="https://www.newyorkfed.org/newsevents/news/research/2022/20220711" target="_blank"><strong>consumer expectation survey</strong></a> pegs one year ahead inflationary expectations at 6.8%, but still lower than <a href="https://www.bls.gov/news.release/cpi.nr0.htm" target="_blank"><strong>actual inflation</strong></a> which is running at 8.6%. The survey reports that three-year ahead inflation is expected to run at only +3.6%.</p><p>But there is <a href="https://asia.nikkei.com/Economy/U.S.-bound-container-ship-traffic-from-Asia-up-4" target="_blank"><strong>new evidence</strong></a> that the China-to-US trade is picking up, a definite sign of rising retail demand.</p><p>We have been reporting on slipping ocean freight rates, but we should also report that US <a href="https://www.wsj.com/articles/freight-rates-are-starting-to-fall-as-shipping-demand-wavers-11657454400?mod=hp_minor_pos13" target="_blank"><strong>trucking freight rates are now falling too</strong></a>. Lower factory orders in an attempt to control rising inventories means less road freight, and as demand slips, companies are trying to reset trucking freight agreements lower. If the retail demand rise is sustained, these renegotiations may be short-lived.</