Artificial intelligence and inflation in the EU

• We examine the impact of sectoral AI adoption on inflation in EU countries. • We use a novel Eurostat dataset on AI use in manufacturing and services in 2024. • The AI use is associated with modest but non-negligible changes of producer prices. • We discuss the nonlinearity patterns of inflation determinants. We investigate the influence of artificial intelligence adoption on producer price inflation across economic sectors within the European Union. We show that AI diffusion is associated with reduced inflationary pressures, with effects most statistically significant in services and the Eurozone. A ten–percentage-point increase in the share of firms employing AI corresponds, on average, to a 0.3–0.6 percentage-point decline in inflation. The association between AI adoption and inflation is nonlinear. The deflationary impact on prices is more pronounced in AI-intensive sectors. Overall, the findings suggest that the integration of AI technologies constitutes a structural force dampening inflation.