Over the past 12 months, inflation has crept into headlines, speeches of regulators and corporate planning. What took them so long?

Raw input costs have been rising significantly since 2003. Energy commodities, metals and housing were in full sprint by 2005. When grains joined in ’07 and oil’s anti-gravity act became the favorite headline, policy makers got out the siren.

By that time the US consumer had already seen at least a 150% cumulative increase in their costs to buy a home as well as heat it, fuel transportation (car, air, commerce) and pay for materials made of copper and aluminum. These price ramps were accomplished in 4 years or less.

The anecdotal culprits are pointed to routinely, demand surge from Asian infrastructure buildout, principally in China and India and devaluation of the dollar. There is much obvious truth to these and a good deal of smoke and convenience as well, when it comes to explaining away fast and furious commodity price behavior.

One explanation for the late-to-the-party understanding, that inflation has been with us as long as the housing ramp and the Asian buildout, is the US policy of omitting food & energy from its core CPI & PPI releases. The core number ignored the canary in the coal mine.

But the real cloaking device is US wages. They’ve been flat throughout the ramp. Regulators focus on wages and if they’re not stirring, then nobody is ringing the bell on inflation. Wages were the best and first tell re: why the housing ramp was false and had to collapse.

When the largest asset a consumer will own (house) increases at an annual rate of 20% or more, and the source for funding it (wages) increases 1 to 2% or less, over the same period, gravity will do the rest. Short term debt funded cash flows drove housing and had no wage support underneath them. To anyone looking, it was clear that short borrowing could never sustain the price of an asset that’s funded over a 30 year term by wages (no matter how many times its bought & sold, 30 years is the relevant funding life of home ownership).

With inflation now a major concern for policy makers and corporate strategies, it has to be assumed that wages are at the core of those concerns, especially since raw inputs have put in most of the price increases they’re going to see. Demand destruction has been reached in the marketplace (e.g. airlines have severely compressed flight schedules and nixed new orders of jets, both due to input costs). Rising wage costs are the real legs of historic inflation. But it feels like that storm is not on the horizon in the US.

Everyone with 10 or more years on corporate payrolls is familiar with the 1 to 3% annual salary boost model. It’s at the heart of corporate budgeting and the cost control models of private equity ownership. There is no field for wages to run in. The US economy is mature. It has gone through its high growth phases in the 20th century and evolved itself with IT, productivity and outsourcing, streamlining cumbersome, labor intensive processes (for better or worse, we shall find out).

While there are certain industries that cannot get all the way clear of labor’s weight – such as automakers – those industries become prey to global competitors whose wage scales remain fractions of their own. And it’s inevitable that Asian labor in China and India will be pressured higher as the cost to live in those countries ramps.

This creates a legitimate source of inflationary fuel for the global consumer. But not near the pressure the US is historically familiar with. And there is regional and global capacity that will be glad to take on the production that China and India negotiate themselves out of.