INFLATION IS NEAR.

Imagine that I'm walking around with one of those sandwich boards proclaiming that soon - very soon - Washington is going to start reporting that consumer prices are rising by uncomfortable amounts.

Sorry, folks.

But when you are doing a column about the Consumer Price Index - or CPI, as it is lovingly called by the Bureau of Labor Statistics (BLS), there's very little a columnist (or even a magician) can do to make this very moist.

Warning: dry stuff ahead!

But you really should continue reading because what I'm about to tell you could have an immense impact on your lives if you invest in the stock market or in bonds, are going to borrow money or save it, care about the nation's recession or maybe just want to know something that the bloodsuckers on Wall Street don't.

For the past couple of springs the BLS, which is in charge of calculating the nation's inflation rate, has been understating the amount of inflation we are experiencing.

Here's what is happening.

Because we've had annual run-ups in the cost of energy these past few springs, the computers that calculate inflation at the BLS now tend to anticipate a jump in gasoline prices.

The computers look at the past five years for guidance on their seasonal adjustments. In other words, they saw this spring's increase in gas prices coming.

And since it was expected, some of the rise in gasoline prices this year was subtracted out of the CPI by the seasonal adjustments.

Just look at the numbers that were reported by the BLS and repeated by the media.

Consumer prices rose just 0.1 percent on a seasonally adjusted basis in May compared with April. The index that measures energy prices rose 0.2 percent, but that was the first time in three months that there was an increase in energy costs.

Say it with me: How can that be?

You and I have both seen the price of gasoline go up and up at the pumps. Gas was a dollar a gallon cheaper last December and most of that increase has come in just the past few months as speculators anticipated (wrongly, it turned out) that people would do more driving and need more gasoline as the summer approached.

So why hasn't the CPI reflected that rising cost?

Because the BLS' CPI calculations - see, it really is dry - have gone kerflooey.

Wall Street doesn't understand this. In fact, the million-dollar economists at financial companies were expecting energy prices in the CPI to rise more sharply this spring and were disappointed.

Here's what they also don't know: Because the CPI understated the rise in energy prices these past few months the BLS' index will probably overstate gasoline prices in the coming months

It happened last year.