Episode Details

In this episode of Bondcast: Speakers’ Corner, host Imogen Bachra speaks to Deepika Dayal about one of the key questions surrounding the AI boom: will artificial intelligence ultimately be inflationary or disinflationary?

Deepika explains why the answer depends heavily on the time horizon. While AI could deliver substantial productivity gains over the longer term, the enormous investment required to build the AI infrastructure is already creating pockets of inflationary pressure — particularly in semiconductors, computer equipment, storage devices and software.

The conversation explores whether manufacturers can continue passing higher AI-related costs on to consumers, how AI subscriptions could affect inflation, and what economists should watch for to identify the point at which productivity gains start to outweigh the initial supply-side pressures.

Key takeaways

* AI’s inflationary impact may come before its productivity benefits. The massive infrastructure buildout required for AI is creating demand for specialised chips, computing power and data centres, putting pressure on some technology prices.

* Communication goods are behaving unusually. After roughly 25 years as a source of disinflation, prices for computers, smartphones, software, accessories and other information-processing equipment are showing pockets of upward pressure.

* Chipflation could spread beyond technology. Semiconductors are critical inputs for industries including automobiles and smart appliances. If higher chip costs begin feeding into these sectors, the inflationary impact of AI could become considerably broader.

* AI software is another potential source of inflation. Companies are increasingly monetising AI functionality through dedicated subscriptions and licences. Products such as Microsoft’s Copilot illustrate how AI features that were initially bundled into existing software can become separately priced.

* The impact on headline CPI may initially be limited. Communication goods have a relatively small weighting in the US CPI after decades of disinflation. However, the weighting is larger in the PCE deflator, the Federal Reserve’s preferred inflation measure.

* The key question is when productivity gains arrive. One early indicator could be wage growth. If AI allows businesses to increase output without proportionately increasing labour costs, wage growth could begin to moderate in labour-intensive service sectors without a corresponding increase in labour-market slack.

Host: Imogen Bachra, Head of Economics and Markets Strategy
Guest: Deepika Dayal, US Economist

This episode was recorded on 3 September 2026.

You can also find this episode of Bondcast on Spotify and Apple Podcasts.  
 
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