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In the US wholesale prices rose more than forecast in March, boosted by higher costs for energy and the biggest gain in food since 1984.The 0.7% increase in prices paid to factories, farmers and other producers followed a 0.6% drop in February, the Labor Department said today in Washington. Excluding fuel and food, so-called core prices rose 0.1% for a second month, restrained by cheaper cars and appliances.

Inflation may be limited as companies rely on productivity gains to offset higher costs of energy and raw materials. Excess capacity and slow job growth underscore the Federal Reserve’s pledge to keep interest rates close to zero for an “extended period.”

The number of Americans filing first-time claims for unemployment benefits dropped by 24,000 to 456,000 in the week ended April 17th, the Labor Department said in a separate report yesterday. The number of people receiving unemployment insurance and those getting extended benefits also fell.

Sales of U.S. previously owned homes rose in March for the first time in four months as buyers took advantage of a government tax credit and the weather improved. Purchases climbed 6.8% to a 5.35 million annual rate, from a 5.01 million pace in February, figures from the National Association of Realtors showed yesterday in Washington. The median prices climbed 0.4% from March 2009.

The thawing out from February’s blizzards probably helped the market last month, while the Obama administration’s credit worth up to $8,000 may keep underpinning demand through June, when it’s next due to lapse. The outlook for the second half of the year depends on the speed and magnitude of the recovery in the job market, indicating the housing rebound may be slow to develop.

The US dollar climbed against the euro for the fourth day, gaining 0.75% to close at EUR1.32854.

In the UK yesterday public sector net borrowing came in below the Treasury’s forecast made one month ago according to figures released by the Office for National Statistics. The borrowing figure for the 2009-10 fiscal year is lower than the £166.5bn predicted by Chancellor Alistair Darling in April’s Budget. Borrowing totaled £152.8bn – lower than the £155.9bn forecast.

March’s deficit was £23.5bn, below the forecast level of £24.1bn. Borrowing in March is typically high as civil servants seek to spend the remainder of their annual budgets.

While the government may be able to highlight that borrowing has come in below recent forecasts made in the budget, the level of public sector debt remains at record high levels. Total government debt now stands at £890bn – equivalent to 62% of GDP. The £163.4bn borrowed is equivalent to 11.6% of GDP.

With the election only two weeks away, parties are sparring over when and how to tackle the biggest budget deficit in the G7. Opinion polls show both Labour and the Conservative parties losing support to a resurgent Liberal Democrat party, raising the prospect that Labour will emerge as the largest party in Parliament and remain in power with Liberal Democrat support.

Also in the UK retail sales volumes grew moderately in March as retailers raised prices, according to data released yesterday. The volume of retail sales including auto fuel rose by 0.4% on the month in March to stand 2.2% above levels a year earlier. However the rise was below the median forecast for an increase of 0.7% on the month and 2.5% on the year.

There was, however, an upward revision to the February output which now shows growth of 2.5% from an originally estimated 2.1% increase. Excluding auto fuel sales volumes rose 0.2% on the month and was up 4% on the year.

While volumes of sales grew moderately there was evidence that retailers increased prices in March. The value of sales was up 0.9% on the month and the implied deflator, a measure of High Street inflation, rose to 2.5% from 1.8% including auto fuels. Excluding auto fuel the deflator increased to 0.7% from 0.1%. The rising deflator may well be due to the depreciation in Sterling seen over the past year which will have pushed up the cost of many imported goods sold by retailers.

The pound fell slightly against the US dollar yesterday, losing 0.11% to close at GBP 1.53686.
In Europe new data from Greece now shows a budget deficit of 13.6% of GDP, not the 12.7% first reported. Eurostat, which was given new data by Greece, said doubts over the figures meant they could be revised again.

The organization said in a statement: “Eurostat is expressing a reservation on the quality of the data reported by Greece… this could lead to a revision for the year 2009 of the order of 0.3 to 0.5 percentage points of GDP for the deficit and 5 to 7 percentage points of GDP for the debt.”

The news hit the euro and stock markets, amid new worries that Greece might default on its debts. Greece’s benchmark 10-year bond yield soared to 8.49%, the highest since the introduction of the single currency in 1998 and more than twice the comparable German rate.  In the forex online market the euro fell for a fifth day against the pound, dropping 0.61% to close at GBP 0.86334. Against the US dollar the single currency posted a fourth day of losses, falling 0.75% to close at EUR 1.32854.

Earlier this week Athens raised almost 2 billion euro by selling three-month Treasury bills. However, even though the fund-raising was successful the interest rate was 3.65%, more than twice the level at which Greece raised similar short-term funds in January. Greece has said its priority is to raise much-needed funds on the financial markets. But the higher the yield on Treasury issues, the bigger Greece’s debt-burden becomes.

Euro zone partners have offered over 30 billion euro in aid with a further 10 billion euro to come from the IMF. However speculation persists that even this might not be enough. On Tuesday, Axel Weber, a member of the European Central Bank governing council, denied reports that Greece might need as much as 80 billion euro to avoid default.

In the forex online market the euro fell against the pound and the US dollar yesterday. It dropped 0.35% on the UD dollar to close at EUR 1.33870. It fell 0.66% against sterling to close at GBP 0.86861.

Yesterday in Canada brought news that wholesale sales unexpectedly declined in February, the first drop in four months, led by automobiles and machinery. Sales declined 1.2% to C$43.8 billion (US$43.7 billion) according to figures released by Statistics Canada. Economists had expected a 1% increase.

Four of the seven wholesale categories recorded decreases in February. Motor vehicle sales fell 5.3%, the first decline since August. Machinery, equipment and supplies sales fell 2.8% while personal and household goods sales fell 1.5%.

Wholesale sales have gained 8.5% over the last year as companies sold goods out of their inventories to meet rising demand. The Bank of Canada said on Tuesday that it will begin raising interest rates to keep inflation in check as the economic rebound has been faster than expected.

Wholesale inventories rose 0.1% in February, the first increase since November 2008. The ratio of wholesale inventories-to-sales rose to 1.17 from 1.15, the first increase since August.

The agency began using a new sample of wholesalers in yesterday’s report and made other revisions to its data. Using the revised data the agency said January’s wholesale sales rose 2.4%. Last month it had said wholesale sales rose 3%, the fastest in three years.

The Canadian dollar closed the day still above parity with the US dollar after hitting a low of CAD 1.00119 during trading, it closed the day down 0.10% on yesterdays close at CAD 0.99895.