A Study on Artificial Intelligence and Inflation: Balancing Cost-Push Pressures and Productivity-Driven Deflation

Abstract : Artificial Intelligence (AI) influences the process of production, employment, distribution chains, and markets. These influences might impact prices in various ways. In the short run, AI use will drive up prices because companies must incur costs, demand for certain workers will rise, and employees will need time to adjust. However, in the long run, AI will lower prices through increased productivity, process automation, market analysis, waste reduction, improved distribution chains, and lower production costs. This paper uses a conceptual review approach and draws on prior research. The effect of AI on prices may be different across industries such as manufacturing, logistics, healthcare, and education. Whether AI increases or decreases prices depends on how quickly it is adopted, how much productivity improves, and how competitive the market is.