U.S. business activity increased across the country in September and through early October, but hurricane damage weighed on some regions and higher energy costs pushed prices up, the Federal Reserve (search) said on Wednesday.

"All Districts reported cost increases for energy, petroleum-based products, building materials, and shipping," the Fed's "beige book (search)" summary of economic conditions said.

Several districts reported that input cost increases were being passed through to retail prices, the Fed said.

Most Fed districts reported the pace of expansion as gradual or moderate, with New York noticing a slowdown. The storms that pounded the Gulf Coast (search) had "significantly negative" effects on the Atlanta region's economy and caused disruptions to economic activity in the Dallas areas, the Fed added.

The Fed said price increases were largely the result of the hurricanes, which disrupted oil and natural gas supply and boosted demand for construction products.

"Nevertheless, many business firms indicated to the District Banks that they expect high prices for energy and construction materials to persist," the Fed said.

The report was prepared by the Philadelphia Fed with information up to Oct. 11.