Goldman Sachs: AI is pushing up inflation in developed economies, with consumer electronics next after memory chips
Goldman Sachs expects AI-related factors to raise the average year-over-year core inflation rate in developed economies outside the United States by about 0.25 percentage points by the first quarter of 2027. The pressure comes mainly from memory costs passing through to consumer electronics and is expected to ease in the second half of 2027.
Original source：Goldman SachsFirst published on Unhidea：Original source date：
Key takeaway
The inflationary impact of AI investment is spreading from memory products to consumer electronics, but Goldman Sachs expects indirect pressure from broad-based demand to be modest and the inflationary impulse to weaken as price increases for electronic inputs fade.
How much will AI raise core inflation?
Goldman Sachs expects AI-related factors to raise the average year-over-year core inflation rate in developed economies outside the United States by about 0.25 percentage points by the first quarter of 2027, with an increase of about 0.3 percentage points in Japan and 0.2 percentage points in the United Kingdom.
The boost to the US core personal consumption expenditures price index (PCE) is larger, at about 0.6 percentage points. However, software and accessories have a relatively high weight in US PCE, amplifying the statistical impact of higher memory product prices.
The timing issue central banks are watching is that data-center construction and import costs may first push up demand and prices, while productivity gains arrive later and are more uncertain.
Why are consumer electronics becoming a new transmission channel?
Demand for memory chips from data centers has pushed up memory prices. Memory cards have a very small weight in most countries' inflation baskets and are currently raising the year-over-year core inflation rate by only about 0.02–0.03 percentage points.
The biggest change since the last update is that costs have begun to pass through to phones, computers and game consoles; these goods have a higher weight in inflation baskets. Goldman Sachs expects higher digital-device prices eventually to raise average core inflation in developed economies by about 0.10 percentage points.
These consumer electronics categories currently contribute less than 0.1 percentage points to the year-over-year core inflation rate in each developed economy; Goldman Sachs expects most of the price increases to materialize over the coming months.
How large are electricity price and broader demand pressures?
Data-center electricity demand is also pushing up electricity prices. Goldman Sachs' US team estimates that higher electricity prices are currently raising US core PCE inflation by 0.1–0.2 percentage points; the expansion of data-center electricity demand outside the United States is smaller, with an impact of less than 0.05 percentage points this year.
Goldman Sachs expects global AI investment to raise the level of real GDP in developed economies cumulatively by 0.5% by the end of 2027, including 0.3% by the end of 2026; by the end of 2027, the increase is expected to be 0.8% in Australia and 0.2% in the United Kingdom.
The bank believes that production of data-center inputs is concentrated in Asian exporting countries, that the overall boost to developed-economy GDP is limited, and that the transmission from output gaps to inflation is weak. As a result, indirect inflationary pressure from broader economic activity is less than 0.1 percentage points.
When will this inflationary impulse weaken?
Goldman Sachs' equity strategy team believes memory prices are close to their peak and therefore expects limited further increases in categories directly exposed to memory prices.
As price pressures on AI-related electronic inputs ease, Goldman Sachs expects the inflationary impulse in most developed economies to decline markedly in the second half of 2027.
