BOJ Sounds Alarm on Inflation Risks from Global AI Demand
The Bank of Japan (BOJ) has sounded an alarm over potential inflation risks driven by global demand for artificial intelligence. In its quarterly outlook report, the BOJ noted that AI-related investment is likely to exert a lasting upward pressure on prices in the short term.
This could be due to stronger investment lifting demand and generating upward pressure on prices. The BOJ also pointed out that the inflationary effects of an AI-driven investment boom may outweigh productivity gains over the medium to long term, as workers and firms adapt to its use.
The report cited a 'positive global demand shock' for AI-related goods as one factor contributing to rising producer prices globally. The BOJ also mentioned the lingering boost to import costs from yen declines could keep persistent upward pressure on domestic inflation.
In terms of consumer inflation excluding fresh food and fuel, the BOJ's estimates suggest that AI-related demand can exert a sticky and lasting upward influence.