At the same time, a measure of inflation expectations matched an all-time high this month. In addition, the largest U.S. chemical maker, Dow Chemical Co., said it would raise prices up to 25 percent on the heels of previously announced increases of 20 percent.

"We think the U.S. economy is still too fragile for a rate hike and thus expect the Fed to stay on hold -- this time and also during the next meeting," Harm Bandholz, an economist for UniCredit, wrote in a note to clients.

Fed officials have said that even though the unemployment rate jumped to 5.5 percent in May, the highest in more than 3-1/2 years, the risk that the economy will fall into deep recession has waned. But struggling housing markets and high energy costs still threaten economic expansion, they said.

Bernanke said that so far, higher raw materials prices have not passed through to lift prices for most other products and have not spurred demands for higher wages.

But he and other officials at the Fed have warned that there is no guarantee this pattern will hold, saying they are watching the inflation situation closely.

Policy-makers have also said the economy may be able to withstand a period of higher-than-desirable inflation without causing lasting damage as long as expectations for higher inflation do not build.

Any unmooring of inflation expectations could trigger a harmful spiral of rising prices and wages, they have warned.

(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)