AI is 'juicing up' inflation, says Moody's Mark Zandi

• PCE inflation likely peaked in May due to declining energy prices.
• AI is currently contributing to inflation through increased demand and costs for chips and electricity.
• Productivity gains from AI, which could lead to deflation, are expected to be slow to diffuse through the economy, taking 5-10 years.

Moody's Analytics Chief Economist Mark Zandi believes the peak for year-over-year PCE inflation (4.07% in May) has likely passed due to falling oil and gas prices. However, he warns that Artificial Intelligence (AI) is currently 'juicing up' inflation through higher chip and electricity costs, and its disinflationary productivity gains are a long way off, potentially taking years or even a decade to materialize significantly.