Everything in this economy seems to slowing—except the prices for energy and food.

The latest sign that inflation is very much on the boil came as the U.S. Department of Labor reported that the prices paid to manufacturers and other producers climbed 1.1 percent in March, more than double forecasts and up from a 0.3 percent gain in February.

Energy prices gained 2.9 percent, while food prices rose 1.2 percent. Rice surged 8.7 percent.

Excluding food and energy costs, the Producer Price Index rose just 0.2 percent.

The Federal Reserve has repeatedly noted that it is concerned about the mounting threat of inflation, but feels that the need to stabilize the markets and promote growth outweigh those concerns. The Fed is expected to cut its benchmark interest rate by another quarter point this month.

Higher food and fuel costs will further sap consumer spending and will cut into companies' profits.

"Cost pressures are building and will continue to build for a few quarters before they recede,'' Michael Gregory, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News before the P.P.I. data were released.

Perhaps it is time to start thinking seriously about stagflation?