Why Fewer Kids Means Higher Inflation Forever

Episode 25 of The Demographics Podcast examines the structural link between falling fertility rates and persistent inflation. Lucas and Luna explain how a shrinking proportion of young people reduces the labor supply, pushes up wages, and forces central banks to keep interest rates higher for longer. They focus on a 2025 working paper from the Bank for International Settlements showing that countries with fertility rates below 2.1 have experienced 0.3 to 0.5 percentage points higher core inflation per year over the past decade. They discuss Japan as a leading indicator, where decades of low birth rates have created labor shortages that drive up service prices even during recessions. The hosts also explore how this dynamic complicates the Fed's dual mandate and whether immigration or automation can offset the inflationary pressure. No prior episode has explicitly connected fertility decline to the inflation outlook. #FertilityAndInflation #Demographics #CentralBanking #LaborShortage #BIS #Japan #Fed #Inflation #AgingPopulation #BirthRateDecline #Economics #MonetaryPolicy #WagePressure #ServicePrices #Immigration #Automation #FexingoBusiness #BusinessPodcast Keep every episode free: buymeacoffee.com/fexingo