Fed upbeat on economy, inflation

But 'Beige Book' report also cites higher prices for transportation, fuel and building materials.

June 15, 2005: 3:44 PM EDT

WASHINGTON (Reuters) - The economy kept growing from mid-April through May and overall price pressures were moderate, though some regions reported rising costs for fuel and building materials, the Federal Reserve said Wednesday.

"Reports from all twelve Federal Reserve Districts indicate that business activity continued to expand from mid-April through May," the Fed's "Beige Book" summary of regional economic conditions said.

"Overall price pressures were moderate, but several reports noted concern over high fuel, transportation, and building materials costs," the central bank added.

Some districts said manufacturers were unable to pass along rising costs of their raw materials because of long-term contracts or foreign competition, the Fed said.

It also said that some regions noted that high gasoline prices were having a negative impact on retail sales.

Labor markets improved in most districts, the Fed said.

The Atlanta Fed prepared the report based on information collected before June 6