Higher prices for gasoline, lumber and food helped boost the value of U.S. retail sales last month, adding to concerns that the Federal Reserve may have to raise interest rates rapidly to control inflation, analysts said yesterday.

Retail sales rose 1.2 percent in May, reflecting consumers' willingness to spend more for a wide variety of goods, the Commerce Department reported.

While that bodes well for the strengthening U.S. economic recovery, it also adds to the reasons Federal Reserve officials are warning that they may have to raise interest rates more aggressively than many investors had expected.

"The retail sales data dovetail with some heightened concern about inflation," said Raymond W. Stone, an economist with Stone & McCarthy Research Associates. "The inflation outlook is worse now than six months ago. . . . [Fed officials] have to worry about whether that gets ingrained in expectations" that prices will keep rising.

More than half the increase in the retail sales figures probably resulted from consumers paying higher prices for goods, rather than from them buying more goods, according to Stone's analysis of the sales figures. The value of sales at gasoline stations alone rose 4 percent, accounting for about one-fourth of the total increase, he said.

Average gasoline prices spiked last month to a peak of $2.054 for a gallon of unleaded regular, but have receded since then, dropping yesterday to $1.99, according to AAA's Web site.

Several Fed policymakers, including Chairman Alan Greenspan, noted last week the recent spate of price increases and indicated that they will raise rates as briskly as necessary to control inflation.

Greenspan may amplify on his comments today when he testifies at a Senate Banking Committee confirmation hearing on his nomination for a fifth term as Fed chairman. He is scheduled to appear a few hours after the Labor Department is to release the consumer price index for May, another piece of the inflation puzzle that Fed officials will consider when they next meet in two weeks.

Stock and bond prices fell yesterday after the retail sales figures were released. Because financial markets were closed Friday in observance of former President Ronald Reagan's funeral, yesterday was also the first trading day since two regional Fed bank presidents chimed in publicly to suggest that inflation risks may be rising.

Fed officials have signaled strongly that they will raise their benchmark short-term rate, the Federal funds rate, at their next meeting. Analysts and investors generally expect the Fed's policymaking committee to raise the rate to 1.25 percent from 1 percent, which would be the first increase in four years.

The Fed funds rate, which is charged on overnight loans between banks, influences many other borrowing costs set by financial markets, such as rates on mortgages, credit cards and business loans. Market rates have been climbing in anticipation of the Fed meeting. For example, the yield on the 10-year Treasury note, which influences mortgage rates, rose to 4.88 percent yesterday, up 0.8 percentage points in one day, and up more than 1.11 percentage points since mid-March, when rates dipped to their most recent lows.

"The market has already taken other rates up considerably more" than a quarter-percentage point, said Stuart G. Hoffman, chief economist with PNC Financial Services Group. "They know a quarter-point [increase in the Fed funds rate] is just the beginning."

Some analysts also believe Fed officials will issue a statement after the upcoming meeting that scraps the idea of raising rates at a "pace that is likely to be measured" in coming months. That was the language they used in the statement issued after their meeting in early May, just six weeks ago.

Fed policymakers have acknowledged since then that they have been surprised by the recent spurt in inflation, and are not sure whether it reflects pressures that are temporary and likely to recede, or broad-based and likely to keep building as the U.S. and global economic recovery continues.

"In my personal view, the word 'measured' is more of a plan than a pledge," Federal Reserve Bank of Atlanta President Jack Guynn said in a speech Friday.

Analysts have interpreted "measured" to mean rate increases of a quarter- or half-percentage point spread out over many months or a few years. Abandoning the language would mean Fed officials would still be able to move gradually if inflation remains tame, but would better prepare investors for the possibility they would move rates up more aggressively if inflation keeps rising.

If they drop the "measured" wording, they likely would also indicate that the risks of rising inflation have grown since the last meeting, Fed Bank of Cleveland President Sandra Pianalto suggested in a speech Friday.

The group could adopt new language to describe the likely pace of rate increases, or could decide to say nothing about the path of policy.

Prices of futures contracts tied to the Fed funds rate still reflect the belief it is highly unlikely the Fed would raise rates by more than a quarter-percentage point at the next meeting. Financial markets often amplify the effect of the Fed's first rate increase, Fed officials know, and they don't want to trigger an overreaction.

All the Fed officials who have spoken publicly in the past week have stressed that the pace of rate increases will depend on the economic data, particularly the behavior of inflation, Hoffman noted. "They are all saying 'it is our intention' to move at a measured pace, 'we think it's an appropriate plan. But events will ultimately dictate the speed at which we move. And we're not going to let inflation become a problem.' "