The Labor Department said said food prices have been steadily rising for more than a year, increasing 4.4 percent over the past 12 months. The price of some food staples showed even bigger increases over the past year, including a 14.7 percent rise in the price of bread and a 13.3 percent increase in milk prices over the past year.

With the rising oil costs, food prices remain under pressure because of global shortages.

"People are going to be paying a lot more for gasoline and groceries in the months ahead," said Mark Zandi, chief economist at Moody's Economy.com.

Wall Street ignored all the bad economic data and instead focused on better-than-expected quarterly results from JPMorgan Chase and two other companies to send stocks higher. The Dow Jones industrial average rose 256.80 points Wednesday to close at 12,619.27.

Zandi said the rise in food and fuel prices has been a significant drain on consumers' purchasing power, another reason he and other analysts believe the country has fallen into a recession. Consumer spending accounts for two-thirds of economic activity.

While the Bush administration is hoping that economic stimulus checks being mailed to households starting next month will make any slump short and mild, Zandi said the $100 billion in payments consumers will get this year will be just enough to offset their higher gasoline bills, leaving nothing left to boost consumer spending in other areas.

In its latest look at business activity around the country, the Federal Reserve said Wednesday that "economic conditions have weakened," citing sluggish consumer spending and rising costs to businesses for raw materials.

Many analysts expect the Fed, which has been aggressively cutting interest rates and shoveling money into the banking system to combat the credit squeeze, will cut rates again when officials next meet on April 29-30.

The housing industry, where the troubles began two years ago, remained under severe strain with construction of new homes and apartments plunging by 11.9 percent in March, the Commerce Department reported, double what had been expected, to a seasonally adjusted annual rate of 947,000 units, the slowest pace in 17 years.

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E-mail: jtcook@desnews.com