Inflation or Deflation?

In the past year, we seem to have gone from a deflationary environment to an inflationary environment. Is this perception reality? Commodity prices have been driven by increased demand for raw materials around the world. China is a big piece of this and a prolonged upturn to their economy could be a nightmare for the Fed to model. At the end of the day, one must remember that inflation is nothing more than too many dollars chasing too few goods. That is the problem right now.