There was good news this Labour Day. The price of frankfurters was down 1.4% from last year’s Labour Day, perhaps marking an allocation away from beef patties, where prices rose, albeit in more muted fashion to last year’s double-digit sizzle, sizzle, pop. Spices, seasonings, condiments and sauces though, were all up. So too, it seems, reading the corporate commentary, is everything else. That the latest inflation print came with a fan of relief as prices rose at ‘a more moderate pace’, thereby turning the heat down on Federal Reserve to do something, there remains a whiff of something in the air. Measuring inflation is something of an art. Fashions change, demand ebbs and flows. There are base effects, and ‘volatile’ items like food and energy that need to be stripped out, and all manner of other adjustments. The model is under constant strain to keep up. Headlines may have trumpeted the ‘cooling’ of inflationary pressures, but consumers are not stupid. They can feel it, which is why inflation expectations are starting to heat up. Many distorted prints related to Covid are expected to normalise, but there are stickier parts of the inflation mix that are now grinding higher. Take housing, where house prices and rents are on fire. The Bureau of Labour and Statistics incorporates the data for rents and the like with a five-quarter lag, so there’s a whole lot more coming down the pipe. It’s all baked in. And the shelter component – a pretty basic necessity – is a major part of the CPI basket. Forecasting inflation when there are so many moving parts, at a time when supply chains are being upended and governments are going at it with big eyes, is no easy game. As those doing the forecasting are finding out.