U.S. producer prices rose almost twice as much as forecast and manufacturing in New York state unexpectedly grew, reducing the odds that the Federal Reserve will cut interest rates more than a quarter point this month.

Food and energy stoked the 1.1 percent gain in wholesale prices in March, the Labor Department reported today in Washington.

Excluding fuel and food, the producer-price index increased 0.2 percent, as forecast. From a year before, producer prices climbed 6.9 percent, compared with a 6.4 percent gain in February. Excluding food and energy, the increase was 2.7 percent from a year earlier, the biggest since July 2005.

China's economic growth slowed down slightly to 10,6% in the first quarter, compared with 11.7 percent in the same period of last year, the government said Wednesday.

China's consumer price index (CPI), a measure of inflation, was up 8.3 percent in March of this year, as against the 8.7 percent level for the previous month.

Li said the country's CPI for the first quarter of this year was 8 percent.

In the January-March period, the inflation indicator rose 7.8 percent for urban areas, and up 8.7 percent for rural areas.

In breakdowns, food prices soared 21.0 percent, driving CPI up by 6.8 percentage points. Housing prices and rents went up 6.6 percent on average, dring the inflation gauge by one percentage point.

Housing starts in the U.S. dropped more than twice as much as forecast in March to a 17-year low, signaling that declining construction will keep eroding economic growth this year.