[amilios]

Even if UBI is funded by taxation, rather than deficit spending, isn't it possible that demand will increase for some products (e.g. basic necessities that UBI recipients will suddenly be able to spend more on), causing inflationary pressure on the prices of those products?

[johnecheck]

By that argument, UBI causes both inflation (for essential goods and services) and deflation (for luxury items and assets).

That's the economy reorienting itself around the new demand landscape. Those price spikes are the signal to producers to ramp up supply, which should push the price back down over time.

Inflation is highly problematic when it spirals. Events like collapse of trust in a currency or government can result in runaway inflation, which is a disaster by all accounts. A one-time price spike caused by a one-time abrupt shift in demand is a very different scenario. Assuming the UBI is higher than the prices increases on necessities, we've successfully redistributed wealth and made those people better able to afford necessities, despite the fact that they cost x% more.