Wholesale trade data came in weaker than expected, sparking speculation that inflation pressure is easing. Statistics Canada reported Tuesday that wholesalers sold a total of $36.6 billion worth of goods and services in March, down 0.5% from February.

This decrease in sales follows a decline of 0.2% in February. The upward movement of wholesale sales since November 2001 has slowed in recent months.

“The impact on monthly GDP will not be negative, however, as wholesale trade managed a modest 0.2% gain after controlling for inflation,” says CIBC World Markets.

RBC Financial says that auto sales dragged the total lower, “but not by enough to prevent wholesalers from reporting a 2.1% quarterly increase in sales in the first quarter. In addition, the sales number was up 8% from a year earlier, underscoring Canada’s strong recent economic performance.”

Still, RBC says, the monthly drop ran counter to expectations of an increase and could be a sign of things to come. “The Bank of Canada has raised interest rates twice this spring and is expected to hike several more times before the year is out. These hikes will have the biggest impact on the financing costs of homes and autos. The weakest wholesale sectors in March were auto sales, sales of lumber and building materials and computers and electronics. Auto sales and home building materials could see more weakness as interest rates continue to rise.”

RBC also notes that the sales drop came alongside an increase in inventories, pushing the inventory-to-sales ratio to 1.27 from 1.24, up from January’s all-time low of 1.23. “Increasing slack in this segment of the economy will in one sense be welcome news for the Bank of Canada, as it will remove a source of inflation pressure.”