The Federal Reserve said in its Beige Book report on a survey of business contacts in the regionroulettesimThe U.S. economy has "expanded slightly" since late Februaryroulettesim, it is becoming more difficult for companies to report rising costs through.

"Consumer spending overall has seen little growth, but reports vary widely across regions and spending categories," said the Beige Book report released Wednesday. "Several reports mention weakness in discretionary spending and consumers remain price sensitive."

"Another frequent comment is that companies 'ability to pass on cost increases to consumers has been significantly reduced in recent months, leading to a decline in profit margins," the Beige Book said.

The latest issue of the Beige Book was compiled by the Federal Reserve Bank of Boston based on information collected on or before April 8. The report includes anecdotes and commentary on business conditions in 12 Federal Reserve jurisdictions.