IMF Chief Economist Pierre-Olivier Gourinchas has warned that AI may fuel inflation not only by driving up chip prices, but also by making consumers wealthier through soaring asset prices and more willing to spend.
October 14, 2025 · IMF Chief Economist
The AI Investment Boom Could Become a New Source of Inflation
Likened to the late-1990s dot-com bubble: surging AI capex is lifting chip and material costs, while soaring tech stocks make consumers wealthier and more willing to spend — pushing demand ahead of productivity gains.
80%+
of economic forecasters say AI buildout is an inflationary factor over the next year
+0.4%
UBS estimated boost to core PCE from AI investment
~50%
of respondents expect a net loss of jobs by end of 2027
NABE Outlook: Forecasts Revised on AI
Inflation forecasts up, growth forecasts down (end-2026, same unit %)
Core PCE forecast: 3.2% · IMF U.S. CPI: 2.7% (2025) → 2.4% (2026)
How the Boom Feeds Inflation — Two Channels
Supply side
Massive data-center capex and chip demand lift prices for copper, chips and materials — competing with autos, toys and construction.
Demand side
Rising tech stocks create a wealth effect — wealthier households spend more, pushing demand ahead of productivity.
Capex & materials → prices up → wealth effect → more spending → demand > productivity
Near-term concern
Capex- and materials-driven price pressure is already materializing — lifting smartphones and electricity costs, and risking delayed rate cuts.
Long-term counterview
Over time, an AI-driven productivity boom could lower nearly all costs — making the technology disinflationary, though that effect is years away.
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