Goldman Sachs: AI Infrastructure Boom to Fuel Temporary Inflationary Pressures

The global race to build out artificial intelligence infrastructure is expected to add temporary inflationary pressures in developed markets, though the effects will vary by region, according to a new analysis from Goldman Sachs. The investment bank noted that rising memory prices are already a factor, contributing 19 basis points to U.S. core PCE inflation.

Gauging the Inflationary Impact

Goldman Sachs projects that the U.S. will experience the most significant direct price pressures from the AI buildout. The bank forecasts a peak boost of 50 basis points to U.S. core PCE inflation and 20 basis points to core CPI.

For other developed markets, the impact is expected to be more delayed but still notable. The bank's analysis shows:

• Direct inflation pressures currently stand at a modest 0.1 percentage points in most economies outside the United States.
• These pressures are projected to lift year-over-year core inflation by an average of 25 basis points through the first quarter of 2027.
• Japan is forecast to see a 0.3 percentage point impact, while the U.K. could face a 0.2 percentage point increase.

Regional Differences and Economic Growth

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The variation in inflationary impact is partly due to the composition of inflation indexes, Goldman Sachs explained. Memory components, a key driver of AI hardware costs, carry a greater weight in the U.S. PCE index. In contrast, non-U.S. economies are expected to see inflation rise later as cost pressures pass through to consumer electronics, which have a larger weighting in their respective indices.

Broader economic spillovers appear limited. The bank estimates a moderate 0.3% average boost to GDP in developed markets through the end of 2026. Australia is forecast to see the largest effect at 0.6%, while the Euro Area and the U.K. will see smaller impacts of 0.2% and 0.1%, respectively. This is attributed to the concentration of data center input production among Asian exporters, which limits the pass-through to other economies.

A Temporary Phenomenon

Goldman Sachs emphasized that these inflationary pressures are expected to be transient. The bank's analysts forecast that the effects will fade through 2027 as the price pressures from key components like memory eventually diminish.