The Fed's price measure, including food and fuel, is up 2.2 percent compared with April 2010. A separate measure from the federal Bureau of Labor Statistics revealed that prices rose to 3.2 percent in April from 2.7 percent the prior month.
Plosser said he favored faster tightening of monetary policy, if possible. "My predilection is to normalize faster rather than slower," he said. Importantly, he added, inflation risks in the United States are "clearly to the upside."
Plosser is a voting member of the Federal Open Market Committee this year. But he isn't the boss. Plosser is among the inflation "hawks" among Fed governors, which means he thinks interest rates should go up to fight inflation. However, the chairman of the Fed, Ben Bernanke, is a "dove," meaning he doesn't see inflation as a threat, at least right now. Bernanke has argued that inflation in food and other soft and hard commodities is transitory.
Some investors believe otherwise.
"We consider it likely that food inflation will prove to be more pernicious and durable this time than in the '70s," said Don Coxe, of Coxe Advisors L.L.P. in Chicago.
Why? First, food shortages generating food inflation were almost entirely caused by weather or crop disease in the 1970s. "Today, we still have problems with weather disruptions in key grain-growing regions, but pesticides and herbicides have dramatically reduced crop losses," Coxe said. "However, we now have man-made assaults on food supplies, and they have every indication of being both dangerous and durable."
