Inflation is everywhere. In congress, deficit hawks are shouting like Bible thumpers that unless we mend

our borrow-and-spend ways, we are doomed to soaring interest rates and a cheapened currency. Inside

the Federal Reserve, a few heretics have been agitating for an interest-rate hike to snuff the I thing

before it raises its ugly head, even with the economy barely in recovery.

Bill Simon, CEO of Walmart U.S., is retailing inflation. He told USA Today that inflation would soon be

arriving from China like another boatload of cheap pajamas, only not quite as cheap as last year's pj's.

One reason is that workers in China's bustling economy had the audacity to demand higher wages.

Throw in higher prices for commodities such as the cotton in apparel, grains like corn in so many foods

and the oil needed to haul it across the planet, and it seems to spell no-way-around-it inflation.Because everybody says so. In the latest Conference Board survey of consumer confidence, the

Expectations Index — a measure of optimism — decreased to 81.1 in March from 97.5 in February,

largely because consumers expect inflation will rise significantly and eat into their disposable income. In

practical terms, consumers were expecting inflation of 6% to 6.5%, which is up from the typical 5% to

5.5%. Reality check: core inflation, at 1.1% in February, was relatively tame compared with headline

inflation, which includes food and energy. That hit an awesome 2.1%. If you think that's inflation, then you

didn't live during the end of the 1970s and the early '80s, when inflation was in the double digits (so very

Argentina). That's why Fed Chairman Ben Bernanke has been Dr. No on a rate hike. He simply doesn't

see compelling data.

In other words, our estimation of inflation is inflated. It's understandable, given that consumers focus on

the very visible signs of inflation at the fuel pump and in grocery aisles, says Lynn Franco, the

Conference Board's head of consumer research. Energy inflation spiked 3.4% in February, so if you use

that as a telltale, you see a storm ahead even if the breeze has merely picked up.

Why, then, is a company like Walmart, so adept at keeping a lid on prices, signaling so hard about rising

prices? It could be that Walmart needs and even wants some prices to rise. The company's sales growth

has been anemic in the U.S. over the past eight or so quarters. A couple of percentage points' worth of

higher prices will provide the growth that Wall Street has been demanding, and if the company can

control its own costs, profits will blossom too.

Walmart would hardly be alone in wishing for some pricing power. One of the tactical issues of inflation is

determining who has to eat it: suppliers, resellers or us. Since the downturn, there has been relatively

little pricing muscle among retailers; we consumers have been in the driver's seat.

But if consumers are building too much inflation into their forecasts, they may be giving up the wheel too

soon. Companies concerned about improving the top and bottom lines aren't bothered by inflation if they

can pass it along. The question is whether consumers will cut back their spending, applying the brake to

the economic rebound. That worry could pass quickly, though, should peace break out in the Middle East,

lowering energy prices.

The one place we certainly haven't had inflation is in wages. With unemployment still high, unless you are

a code jockey in the social-network business, your chance of getting a raise is as good as that of

Congress's cutting the national debt without raising tax revenues. "I definitely think that wages are going

to go up," says Ken Goldstein, an economist at the Conference Board. "Maybe around 2013." He's only

half joking: he doesn't see wages rising until next winter at the earliest. It seems incongruous that we'd

worry so much about inflation when there's hardly any surplus money to feed it. I'm guessing that having

too much money is a problem a lot of people would be happy to wrestle with.