U.S. industrial production posted surprising gains in March while inflation rose only slightly and housing starts slowed, according to government reports released today that showed conflicting data about the state of the economy and the likelihood the Federal Reserve will cut interest rates before its May 15 meeting.

U.S. industrial output rose 0.4% in March, according to a Federal Reserve report, compared with a 0.4%. drop in February.

The consumer price index (CPI), a measure of inflation, rose 0.1% in March, according to a Department of Labor report, matching the 0.1% forecast by analysts, and below a 0.3% jump in February.

The overall CPI number was dragged lower by a 3.7% drop in gasoline prices and a 2.1% drop in natural gas prices, which began to rise sharply at the end of March and should continue to rise in April, analysts say.

The government said March building permits fell 3.6% in March to a seasonally adjusted annual rate of 1.615 million after a 2.8% drop in February. But both declines were modest, suggesting the home-building industry is still reasonably confident about future prospects for the economy.