Wholesale sales likely partially rebounded in March after declining 1.8% February, consistent with increased exports.  In addition, sales were depressed in February due to the Family Day holiday and some unwind of this effect probably occurred in March.  The weaker-than-expected manufacturing sales data suggests some downside risk to our forecast.  In Q1, wholesale sales were likely an annualized 2.7% below their Q4 average, in-line with our forecast calling for well-below potential growth in the quarter.

Soaring wholesale gasoline prices coupled with the continued upward trek in crude oil prices contributed to a probable 0.4% gain in the Producer Price Index.  Our forecast assumes a decline in food prices, in-line with the drop in the USDA's agricultural price index though the hefty upward trend in the export price index suggests some potential upside risk to our view. The core index was likely up 0.2% in April, boosted by higher import prices. Relative to a year-ago, the all-items PPI probably advanced 6.6%, well above the 2.9% pace seen since 2000.  The PPI data has indicated that manufacturers are receiving higher prices for their output.  What is less clear is the extent to which these increases will be passed on to the consumer.  Our base-case remains that core consumer price inflation will trend towards 2.0% as we head through the year, largely a function of the considerable slack which has been built in the economy.