Barclays points out that the Bank of Japan previously focused on three types of upside inflation risks: the Middle East energy shock, AI-related demand, and yen depreciation. Now, two of these are showing signs of cooling, but conversely,
the year-on-year growth rate of the PPI for non-ferrous metals further accelerated to 40.6% in July.
Barclays explicitly mentions that the Bank of Japan links this change to the expansion of global AI-related demand and believes that among the three major inflation risks, AI-related demand is increasingly worthy of close attention. With traditional energy and exchange rate-driven imported inflation beginning to cool,
costs of metals and equipment driven by AI infrastructure demand may become a new source of marginal inflation.
