Raging inflation a clear and present risk to retail demand

<p>Kia ora,</p><p>Welcome to Tuesday’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 retailers worldwide are now on eggshells waiting to see how hard consumers pull back in the face of the supply-chain-induced inflation surge.</p><p>But first, it is Memorial Day in the US and they are still on holiday. They are using the break to ponder their ridiculous obsession with guns. Away from there, financial markets seem upbeat. Asian equity markets ended yesterday booking stellar gains mostly. Overnight European equity markets were mostly quite positive. And that was despite peaky consumer inflation data.</p><p>Perhaps the better business mood relates to signs that <a href="https://asia.nikkei.com/Spotlight/Coronavirus/Shanghai-to-lift-unreasonable-curbs-on-firms-Beijing-eases-restrictions" target="_blank"><strong>Shanghai is moving toward re-opening its city</strong></a> and region after a two-month lockdown.</p><p>A pickup in global demand and tighter supply is seeing the oil price rise sharply.</p><p>But supply-chain pressures don't seem to be easing, and may in fact get worse with a China re-opening. Japanese consumers are <a href="https://asia.nikkei.com/Spotlight/Supply-Chain/Japan-consumers-wait-months-for-washing-machines-air-conditioners2" target="_blank"><strong>waiting months</strong></a> for appliances they once took for granted. And that is all to do with supply-chain snafus around computer chips.</p><p>China not only has a Covid crisis, and a related supply-chain crisis, it also has a <a href="https://www.scmp.com/economy/china-economy/article/3179730/cash-crisis-amid-chinas-stalling-economy-rural-banks-freeze?module=lead_hero_story&pgtype=homepage" target="_blank"><strong>banking confidence crisis</strong></a> in one province. It is bad enough that people took to the streets demanding access to their money.</p><p>In Europe, <a href="https://www.d