Inflation for both wholesale goods and the consumer price index is rising more than analysts and government officials hoped, reports the Associated Press. Gas prices pushed the Consumer Price Index up 0.4 percent in May or nearly 5 percent on an annual basis.

Even the core inflation rate (without food and gas) rose 0.3 percent, which is really pushing the Fed targets for managing inflation. Last week Fed Chairman Ben Bernanke said, in effect, that the core rate was rising too fast and even before this morning’s news it looked like a rate increase was certain later in June.

There was an early morning bounce back in stocks but investors are worried that the continued ratcheting up will guarantee a rough landing for the economy to break inflation. As the news service notes, “The worry at the Fed is that the relentless rise in energy costs is becoming a wider inflation problem.”

Whether it’s a rough landing or not, the generals at the Fed are certainly fighting the last war. They are determined to avoid reliving the 1970s and as long as we’re facing that kind of enemy - soaring gas prices kickstarting inflation across the economy - they should keep fighting it.