Silicon shock: the macro of technology inflation
The article discusses a significant shift in technology pricing, highlighting a recent spike in software and accessory costs that has contributed to inflation. It emphasizes the growing economic impact of technology, likening it to energy in terms of geopolitical and financial implications. The piece warns that traditional economic models may not adequately capture the inflationary pressures stemming from advancements in technology, particularly AI.
- ▪For 25 years, the price of computer software and accessories fell by about 5% annually, but this trend reversed dramatically in late 2025.
- ▪A recent report indicated a 73% annualized spike in software prices, contributing significantly to core inflation.
- ▪Japan is experiencing a record digital deficit, projected to reach 18 trillion yen by 2035, as it increasingly relies on foreign technology services.
Opening excerpt (first ~120 words) tap to expand
For a quarter-century, the price of computer software and accessories fell by roughly 5% annually. It was the modern economy’s most reliable disinflationary anchor. In late 2025, that anchor snapped. Last week, a technical note by three US Federal Reserve economists, including a serving Governor until the day before the note’s publication, revealed that this category just posted a 73% annualized spike over four months. Its contribution to core inflation? Nine standard deviations above the historical mean. A 1.2% sliver of the basket was adding roughly two-thirds of a percentage point to the Fed’s preferred gauge. The authors were careful, but their caution is the real charge.
…
Excerpt limited to ~120 words for fair-use compliance. The full article is at Asia Times.
Discussion
0 commentsMore from Asia Times
