Chart of the day

Yesterday, the Labor Department reported that the consumer price index rose a hearty 0.7% in January. However, core inflation (which excludes the volatile food and energy sectors) was up a modest 0.2%. The market actually traded up on the news. One theory as to why the current inflationary environment is largely commodity based and hasn't yet translated into significant wage inflation (as reflected by the modest core numbers) is that the the very same economies (i.e. China) that are demanding more raw materials are supplying cheap labor.