The cost of the two items that tend to hit American pocketbooks the hardest – food and gas – are soaring, crimping the buying power of so many already-strapped consumers. Still, the Federal Reserve maintains inflation is not an issue.  

After Thursday, it may be an argument increasingly harder for the Fed to make.

The Fed, which sets U.S. fiscal policy, has said for months that inflation is not a major concern, and that the price increases at the grocery store and the gas station are likely just temporary But  Thursday morning, the Consumer Price Index showed an increase of 0.5% in February, the largest increase since June 2009, according to Labor Department. The increase is being attributed to a surge in the price of energy and food-related commodities.

Also Thursday, consumer-products giant Kimberly Clark (KMB) said it is raising prices on tissues, baby wipes and diapers, in some cases by as much as 7%. 

Consumers now paying about the same -- $3.50 -- for a gallon of milk and a gallon of gasoline might have trouble grasping the Fed's concept that prices aren't going higher.

“It is a bit of a juxtaposition,” said Stuart Hoffman, chief economist with PNC Financial Services.

Gas prices, for instance, rose 4.7% last month, primarily due to widespread political unrest in the Middle East that has raised concerns of supply disruptions. Earlier this month a barrel of oil hit a two-year high of more than $105. Overall, the energy inflation index rose 3.4% in February and is up 9.8% since late 2010.

At the same time, the price of many agricultural products, including corn, wheat and soybeans, has also been climbing. Bad weather in many areas around the world is being blamed for limiting supplies and driving up costs, in some cases nearly doubling prices in a matter of months. In February the price of food in the U.S. jumped 0.6%, the most since the fall of 2008, according to the Labor Department report. (So-called core prices, which don’t include food and energy, rose 0.2% in February, about the  same as in January.)

Hoffman, who predicted food and energy prices will continue to rise in March, said the Fed is making an “educated” bet that the run up in commodity prices will reverse itself “before it bleeds through” into other areas of the economy.

“They’re saying they believe this is transitory, that they don’t think this is a sign of things to come – this is not the beginning of a new wave of inflation,” he said.

What the Fed needs to be concerned about, according to Hoffman, is that consumers and Wall Street investors don’t buy into the Fed’s message that inflation remains under control. That would create a “self-fulfilling prophecy” in which consumers’ and investors’ inflationary expectations start to influence real inflation figures.

If that happens the Fed, which has been extremely reluctant to alter monetary policies put in place in the wake of the recent economic crisis, would have to start thinking about raising interest rates and taking other measures to offset inflation, he said.

At the Fed’s policy meeting on Tuesday, Chairmen Ben Bernanke and his colleagues signaled that the stubbornly high U.S. unemployment rate warrants no change in interest rates, which have ranged between 0% and 0.25% for more than two years. The Fed also maintained its commitment to so-called quantitative easing, in which the Fed is buying $600 billion in U.S. Treasury notes in an effort to pump cash into the economy.

In an effort to hedge their position that spikes in energy and food prices are temporary, the Fed said it will “pay close attention to the evolution of inflation and inflation expectations.”

One question on the mind of consumers might be what the Fed defines as "temporary."

In a note distributed to clients, Paul Ashworth, chief U.S. economist at Capital Economics, reminded that he’s been predicting for months that rising agricultural commodity prices “would eventually feed through into the PPI and CPI and here it is.”

Ashworth added ominously: “There is plenty more to come over the next few months.”

Follow Dunstan Prial on Twitter @DunstanPrial