NEW YORK (Bloomberg) - Billionaire investor Warren Buffett says he's concerned about "stagflation", or slowing in the US economy while inflation accelerates.

"We're right in the middle of it right now," said Mr. Buffett, chairman of Omaha, Nebraska-based Berkshire Hathaway Inc., in an interview on Bloomberg Television yesterday. "I think the 'flation' part will heat up and I think the `stag' part will get worse."

Mr. Buffett, the world's richest person, runs a company with a $72 billion stock portfolio and businesses ranging from candy to corporate jet leasing and insurance. He is said the US housing slump has been a drag on Berkshire's earnings, adding yesterday he is unsure when the economy will recover.

"It's not going to be tomorrow, it's not going to be next month, and may not even be next year," he said.

The US economy will expand 1.4 percent in 2008, the weakest performance since 2001, according to a survey by Bloomberg. Federal Reserve Chairman Ben Bernanke said on June 9 the risks of a "substantial downturn" in the economy have diminished and policy makers will "strongly resist" an increase in inflation expectations. Consumer prices rose 4.2 percent in the 12 months ended in May, the fastest pace since January.

Mr. Buffett, whose Berkshire is the second-largest shareholder of Anheuser-Busch Cos., declined to comment on InBev NV's $46.3 billion bid for the St. Louis-based brewer. He disavowed comments in the media attributed to him about whether he favors the offer.

"I've been reported to be in St. Louis, I've been reported to be at dinner with August Busch IV," Mr. Buffett said referring to the CEO of the brewer. "There must be some guy in St. Louis that looks a lot like me, because I have not been in St. Louis since this started."

Federal regulators may not need to step in to help Lehman Brothers Holdings Inc., the securities firm that lost about 62 percent of its market value this year, Mr. Buffett said.

"The fact that they intervened on Bear Stearns prevents them from needing to intervene on other large investment banks," Mr. Buffett said. "The very act of the fire engine showing up when there was a fire means that other fires won't break out in this particular case."

The second-largest underwriter of mortgage debt last year, Bear Stearns Cos. sold itself after an exodus of clients and lenders threatened to plunge the company into bankruptcy. New York-based JPMorgan Chase & Co. agreed in March to buy Bear Stearns with backing from the Fed.

Mr. Buffett also praised Barack Obama, the Democratic senator from Illinois running for president against Republican John McCain, an Arizona senator.

"He will have more concern for the people who don't get the lucky breaks in life like I've gotten," said Mr. Buffett, ranked the richest man by Forbes magazine.