How fast is inflation slowing?

<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 it will be all about CPI inflation today.</p><p>First, Stats NZ will release our December inflation figure at 10:45am (markets expect 7.1%). Then at 1:30 pm NZT the Aussies will release theirs (markets expect 7.5%). Misses from these expectations could well move financial markets.</p><p>Internationally last week, <a href="https://www.redbookresearch.com/" target="_blank"><strong>American retail sales</strong></a> grew their slowest on a year-on-year basis for same-store trading, and that wasn't enough to keep pace with inflation and was the weakest result since early 2019 (excluding the pandemic twists).</p><p>The <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/research/regional_economy/surveys_of_business_conditions/manufacturing/2023/pdf/mfg_01_24_23.pdf" target="_blank"><strong>Richmond Fed factory survey</strong></a> wasn't flash either and reported some deterioration in business conditions in January. New order levels and order backlogs were notably weak. Price pressures are still high even if they are falling away quite quickly now.</p><p>More generally, activity in both service and manufacturing sectors fell at a slower pace in the US in January according to the internationally benchmarked <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/40a5dc326b7f46e5a97c9033771d30ff" target="_blank"><strong>Markit PMIs for both their factory and services sectors</strong></a>. These are out on a 'flash' basis for this month.</p><p>Overall, companies are <a href="https://www.bls.gov/news.release/empsit.t11.htm" target="_blank"><strong>shedding temporary jobs faster now</strong></a>, in what can be an early sign of a labour market contraction.</p><p>In <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/9acde143e1d6454e89942f5c890c3b92" targ