Prices are widely expected to keep rising as summer approaches. Gasoline futures jumped by nearly 6 cents to finish at a settlement record of $2.881. That is less than a nickel below the all-time intraday high for the benchmark contract that was set as Hurricane Katrina made landfall in 2005.

Oil's recent run above $100 a barrel has been largely attributed to a steadily depreciating dollar, because the weakness prompts investors to seek a safe haven in hard commodities such as oil and gold. The greenback strengthened marginally against the euro Tuesday afternoon, but still remains near all-time lows against the 15-nation currency.

The surge in energy and food costs is coming just as unemployment is rising and many economists believe the nation has fallen into a recession, developments that have taken a toll on President Bush's approval ratings. Seven out of 10 Americans now disapprove of Bush's handling of the economy, an all-time high, according to the latest Washington Post-ABC News poll.

Democrats, hoping to win the White House in November, said the string of bad economic statistics showed how Americans were hurting.

"As the paychecks of middle class families get smaller and their homes lose value, their wallets are being further emptied by the skyrocketing everyday costs of gas and food," said Sen. Charles Schumer, D-N.Y.

On Wall Street, stocks climbed higher as investors were encouraged by a report showing a modest rebound in manufacturing in the New York region. The Dow Jones industrial average rose 60.41 points to close at 12,362.47.

For the past 12 months, wholesale prices are up by 6.9 percent and core inflation is up by 2.7 percent, the biggest year-over-year increase in nearly two years.

With the economy slowing and inflation rising, some analysts are concerned the nation could be facing another bout of stagflation, the malady that last occurred in the 1970s, when economic growth stagnated but inflation kept rising.

Such a development would put the Federal Reserve in a bind. The central bank has been cutting interest rates to combat the current slowdown, but if inflation pressures keep rising, it might be forced to stop cutting interest rates for fear that it would make inflation worse.