Americans to Fed: prices are too high

 * People say Fed disconnected from lives of citizens
 * Fuel and food prices weigh heavily on household budgets
 By Daniel Trotta
 NEW YORK, April 7 (Reuters) - On the streets of America,
the debate over inflation is over. Prices are too high and
rising too fast, many people say.
 "The government says inflation is low, but that's not what
I'm seeing at the grocery story," Jorge Alberto, an 88-year-old
retiree in Miami, said walking out of a supermarket. "My
pension is being put to the test."
 Policy-makers at the U.S. Federal Reserve largely agree
that promoting economic growth is still more urgent that
constraining a nascent pick-up in consumer prices.
 They look beyond the volatile fuel and food prices that
have pushed up inflation and focus instead on data showing
little if any upward rise in wages, something they would see as
the seed of a sustained and broad-based rise in prices.
  "I don't think the Federal Reserve has a clue about us
little people," said J. McKeever, an instructor at the
Montessori Institute of Milwaukee.
 "I am very frugal, so I watch what I spend. And what I have
noticed in recent months is that I have less money before than
I used to, while making the same amount of money and having to
pay for health care," she said.
 Across the country, Americans tell of a disconnect between
the real economy they live in and the macroeconomic picture as
described by economic indicators.
 Consumer prices rose 0.5 percent in February from January,
and 2.1 percent over the previous year but the rates were half
that when stripping out food and energy. [ID:nN17148632]
 "There are no salary increases and you know you have the
pressure at work to cut, but on a personal level everything
else keeps going up. You never seem to be able to catch up,"
said Paty Peterson, 50, of suburban San Francisco.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 Inflation graphics:
 Inflation and oil prices    http://link.reuters.com/hup88r
 Expectations, gas prices    http://r.reuters.com/jup88r
 Five-year breakeven rate    http://r.reuters.com/kup88r
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Policy-makers at the Fed must weigh how much the perception
of inflation might trigger actual price increases. The worry
would be if businesses pushed up prices to cover their rising
costs and workers in turn demanded higher wages to cover theirs
-- which could spark a self-feeding cycle.
 Consumers' inflation expectations rose briskly in March,
according to the Thomson Reuters-University of Michigan survey.
[ID:nN11275400]
 U.S. households are facing higher prices for staple
products such as Tide laundry detergent and Hershey chocolate
bars as cocoa, sugar, oil, wheat, corn and other commodity
prices climb.
 Major consumer products makers have said in recent weeks
that they will be raising prices including Procter & Gamble Co
(PG.N: Quote, Profile, Research), which said it would raise laundry detergent prices 4.5
percent in June. Kimberly-Clark Corp (KMB.N: Quote, Profile, Research) is raising prices
on diapers, baby wipes and toilet paper as much as 7 percent.
 "My grocery bill is up 30 percent over last year," said
Cheryl Holbrook, 47, who educates her seven children at home in
Mobile, Alabama. "We have to pinch every little penny and make
it squeak."
 The Fed's hawks, who stress the risks of inflation, have
stepped up their argument that it may be time to wind down the
central bank's $2.3 trillion securities-buying program to
stimulate the economy. So far, they have been out-argued by
those who see recovery from the Great Recession as fragile and
still in need of a boost.
 The European Central Bank, by contrast, on Thursday raised
interest rates for the first time since 2008 to contain rising
prices. [ID:nLDE7351QH]
 If underlying prices rise, or an inflationary psychology
starts to take hold, the Fed could change course.
 A recent Reuters poll found long-term expectations for the
food and fuel prices that have pushed inflation higher in
recent month are on the rise. [ID:nLDE7221HF]
 Consumers meanwhile complain that food and gasoline consume
too much of their income, forcing difficult decisions to stay
within budgets.
 Eileen Reilly, 72, a retired resident of the Chicago suburb
of Geneva, said higher gasoline and food prices have forced her
to drive less, buy a cheaper food for her dog Lucky, and stop
taking pills for a liver condition she declined to identify.
 "My doctor said I could die if I don't take them," Reilly
said, rolling her eyes. "I told him that I'm 72 and I'll be
dead soon as it is. Besides, it was either the pills or the car
and the dog. And I need the car and I love the dog."
 (Reporting by Kevin Gray in Miami, Mark Felsenthal in
Washington, Verna Gates in Birmingham, Alabama, Nick Carey in
Chicago, Brad Dorfman in Chicago, John Rondy in Waukesha,
Wisconsin, Peter Henderson in San Francisco)
 (Writing by Daniel Trotta)

Americans to Fed: prices are too high