If Fed Chair Janet Yellen wants to find inflation in the U.S. economy, she should just stop at a burger joint.
While traditional indicators show little price pressure, the fabled Bacon Cheeseburger Index, which tracks the cost of the gastronomic delight of the same name, is on an aggressive path higher.
In fact, the price has jumped 7.7 percent over the past year, according to calculations from brokerage Convergex, using government consumer price index data. (Tweet This)
The biggest contributor to the surging price was a more than 17 percent jump in the cost of ground beef. Costs for bread, cheese and, to a lesser extent, bacon are on the rise as well. White bread posted an annual gain of 3.4 percent, bacon rose 0.2 percent and cheese was up 7.3 percent in February, according to the Bureau of Labor Statistics.
"Yes, we know the Fed can't make more cows or milk or pigs," Nick Colas, chief market strategist at Convergex, wrote in a report that examined several of what he called "off the grid" economic indicators. "But consumer attitudes regarding inflation are anchored in their shopping cart, as anyone who lived through the 1970s will tell you."
While the Bacon Cheeseburger Index is intended as lighthearted look at economic conditions, for the Fed inflation is serious business.
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The central bank has been waiting for its preferred guides, such as personal consumption expenditures and the CPI, to gain at a better than 2 percent pace before it starts raising interest rates. The Fed has kept its target funds rate near zero for more than six years as it waits for the economy to take off.
Colas' examination found several other economic trouble points.
Food stamps remain a significant source of help for many Americans, with 46.8 million still on the Supplemental Nutrition Assistance Program as of December, only a modest decrease from the previous year. Colas also noted the substantial outflow from U.S. equity funds, which is at its highest rate since 2009.
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Most of the positive off-the-grid indicators came from auto sales, which have surged, particularly in trucks and used cars. Government surveys also show more people are quitting their jobs—the "Take This Job and Shove It" indicator—in a move that often signals labor market confidence.
"This jumble of "Off the grid" data in many ways mirrors what the official economic releases reveal: the American economy in the first quarter of 2015 made as much progress as someone trying to walk up a 'down' escalator," he wrote. "There are bright spots in the auto industry and amongst those workers already employed who are trading up to better jobs. There are real potholes in the story as well, especially at the lower rungs of the economic ladder and investor confidence in domestic equities. Taken as whole, the data we present here feels very much like nothing much happened in Q1 with regard to U.S. economic growth."