The International Monetary Fund (IMF) believes that artificial intelligence could push inflation higher in the coming years. The reason is not just the rising cost of computer chips, but also the extra spending that may come from people feeling wealthier.
Pierre-Olivier Gourinchas, the IMF’s chief economist, said that the huge investment boom in AI has increased the value of many technology companies, especially in the United States and countries like South Korea. As stock prices rise, people’s retirement funds and investment portfolios become more valuable. This creates what economists call the “wealth effect” — when people feel richer and become more willing to spend money.
According to Gourinchas, this increased spending can lead to higher demand for things like travel, housing, and expensive purchases. When demand rises faster than supply, prices often go up, adding to inflation.
He explained that AI affects inflation through several different channels. One is supply chain pressure. The growing demand for chips, memory, and data center equipment has created shortages and higher costs. Some major companies, including Apple and Microsoft, have already increased prices on certain products because of these rising costs.
Gourinchas also noted that people are still sensitive to inflation after the sharp price increases seen in recent years. Because inflation remains fresh in consumers’ minds, even small price hikes are attracting more attention.
Beyond AI, he highlighted two other major risks facing the global economy. The first is uncertainty in energy markets due to tensions involving Iran, which could affect energy prices worldwide. The second is growing financial pressure on many countries as government debt rises, economic growth slows, and borrowing becomes more expensive.
He ended by pointing out that many governments are struggling to increase revenue and are facing difficult questions about how to deal with widening budget deficits in the years ahead.
 believes that artificial intelligence could push inflation higher in the coming year...){kind=link}