Goldman Sachs says artificial intelligence is starting to push consumer prices higher
Goldman Sachs research has concluded that artificial intelligence, expected to weigh on consumer prices in the long run, is in the short term lifting costs across the United States and Europe. The bank warns that surging investment in AI infrastructure and electricity demand could feed into headline inflation.
Goldman Sachs economists say that while artificial intelligence is expected to lower consumer prices over the long run by lifting productivity, in the short term it is doing the opposite. The bank estimates that AI-related capital spending and surging electricity demand are adding 0.2 to 0.4 percentage points to annual inflation in both the United States and Europe.
Investment in data centres, advanced chip manufacturing and additional power generation is starting to feed through into services and energy prices. Goldman notes that US electricity prices have been rising more than five per cent year-on-year, a trend that could delay the Federal Reserve's rate-cut path.
In Europe, industrial economies such as Germany and the Netherlands are bracing for AI infrastructure to disrupt their energy cost balance. The European Central Bank has acknowledged the additional pressure and the bank expects the deflationary benefits of AI to start showing up only from 2027 onward.
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