COL wage-push threatens inflation retreat

<p>Kia ora,</p><p>Welcome to Thursday’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>And today we lead with news that as global price pressures ease, we may be starting to see a wage-price surge locally.</p><p>But first, the American housing market is continuing its measured rise with a surprise <a href="https://www.nar.realtor/newsroom/existing-home-sales-surged-14-5-in-february-ending-12-month-streak-of-declines" target="_blank"><strong>rise in February pending home sales</strong></a>. You may recall they rose more than +8% year-on-year in January, and analysts thought February would give back about -2.3% of that. But in fact they rose again, by +0.8%, and locking in the gains. It is the Northeast where the big gains are coming from; the West remains weak. It's a recovery of transaction volume at this stage, not in prices, where the median remained at US$363,000 (NZ$583,000).</p><p>This gain in real estate volume may well have carried on into March. <a href="https://www.mba.org/news-and-research/newsroom/news/2023/03/29/mortgage-applications-increase-in-latest-mba-weekly-survey" target="_blank"><strong>Mortgage applications</strong></a> rose +2.9% last week, a fourth consecutive week of increases, and the longest winning streak in four years. Mortgage interest rates were little-changed with the benchmark 30yr fixed rate at 6.45% plus points, but that is a one-month low.</p><p>Singapore <a href="https://www.singstat.gov.sg/-/media/files/publications/economy/smppifeb23.ashx" target="_blank"><strong>reported</strong></a> that their producer prices are deflating fast now, down -4.7% in February on top of a -1.5% drop in January from the same month a year ago.</p><p>In Thailand, their central bank <a href="https://www.bot.or.th/English/PressandSpeeches/Press/2023/Pages/n1666.aspx" target="_blank"><strong>raised its policy rate</strong></a> by +25 bps to 1.75%. They are reporting