MUNCIE, Ind. -- The mid-spring data on the U.S. economy bring almost as many fresh questions as they provide answers, says a Ball State University economic analyst.

At first glance, the information on the behavior in April of retail and wholesale prices and the output of the industrial sector, offers fairly clear-cut evidence of a significant slowdown in the economy, which would seem to push back the prospect of further interest rate hikes by the Federal Reserve Board, said Patrick Barkey, director of the Bureau of Business Research.

"However, April's data were distorted by a variety of special factors that caused them to make the economy look more tame than it actually was," he said. "The direction of Fed policy in the near future is still a tough call."

News that wholesale prices, as measured by the Bureau of Labor Statistic's (BLS) Producer Price Index, moved down by 0.6 percentage points in April surprised most analysts after the index for finished goods moved down in each of the previous two months. The index now rests a scant 0.8 percent above its level twelve months ago, Barkey said.

Because of the recent downward movements in the volatile energy and food sectors, however, the special index that removes these two erratic components may be a better indicator of the pressure on prices at the wholesale level. Excluding food and energy, wholesale prices edged down by 0.1 percent in April, after rising 0.4 percent in March.

Barkey believes the situation is similar for prices at the retail level. Overall inflation, as measured by the Consumer Price Index, was mild in April, with the CPI rising only 0.1 percent. Important factors in this moderation, however, were a 1.5 percent decrease in energy prices and a 0.2 percent fall in food prices for the month. Taking these two components out, retail prices accelerated slightly, rising 0.3 percent in April, following a 0.2 percent gain in March.

Even so, the annualized rate of growth in prices over the three months ending in April was only 3.1 percent, when food and energy are excluded, and only 1.5 percent when they are not. When weighed against the Department of Commerce's preliminary estimate of 5.6 percent growth in the economy for the first quarter, these price increases seem quite tame, Barkey said.

"The voting members of the Fed's Open Market Committee will be concerned about future inflation when they meet in the next few days, however," he said. "The news that increased inflation has not yet arrived, however welcome, may not be persuasive. "You might think that the news that the growth in output of the nation's mines, factories, and utilities came to a halt in April would likewise dissuade the Fed from clamping further on the economy, but again there are special factors that distort the report."

Barkey said that manufacturing output, as measured by the Fed's Industrial Production Index for manufacturing, fell by 0.2 percent in April, after rising by half a percentage point the previous month. But that decrease was largely due to strikes in the automobile industry -- removing motor vehicles makes the overall index go up by 0.3 percent for the month. "Thus pressure on prices -- and on the Fed to act -- has been removed for a while, but it could surface again quite quickly," he said.