Traders looking for direction on the U.S. economy and the timing of interest rate hikes had plenty of economic news to digest this morning.

U.S. consumer prices rose by a modest 0.2% in April. The advance in the consumer price index followed a sizable 0.5% increase in March, the Labor Department reported today.

Excluding energy and food prices, the “core” rate of inflation rose by 0.3% in April, on top of a 0.4% rise the month before. This indicated that while inflation is still considered low, it is clearly awakening from a long slumber.

In the first four months of this year, consumer prices rose at an annual rate of 4.4%, compared with a 1.9% increase for all of last year. Core prices, meanwhile, also picked up steam. So far this year, they went up at a rate of three%, outpacing the 1.1% rise for 2003.

Economists were forecasting a 0.3% rise in the overall CPI in April and a 0.2% increase in core prices.

In a separate release, the Federal Reserve Board said roduction at U.S. factories, mines and utilities rose 0.8% last month, the biggest monthly rise since November 2003. That followed March’s 0.1% decline in industrial production.

Capacity use jumped to 76.9%, the highest level since July 2001, from 76.5% a month earlier.

Economists had expected production to rise 0.4% and capacity utilization to clock in at 76.7%.

Meanwhile the University of Michigan said its overall consumer-sentiment index was flat in May at 94.2, well below the reading of 96 that economists had expected.

A measure within the survey of consumers’ assessment of current conditions, which often reflects the pace of layoffs, rose more than two points to 107.2. But a gauge of expectations for the future, which tends to be driven by the stock market’s performance, dropped a point and a half to 85.8.

Finally, business inventories increased 0.7% to a seasonally adjusted $1.205 trillion in March, after a revised 0.8% advance in February, the Commerce Department reported.

Economists had expected inventories to grow only 0.4%.

Business sales rose 2.9%, after a revised 0.9% increase a month earlier.