Next.js: image imports stopped working after updating NextJS from 14.0.1 to 14.1.1

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I have a small project built on NextJS and using App Router. A have several places where I use Image component and based on the docs I'm importing image itself.

After updating next from 14.0.1 to 14.1.1, I've got build errors related to .png and .svg imports:

Failed to compile.

./src/components/dashboards/MyComponent.tsx
Module not found: Can't resolve 'public/images/image.png'

https://nextjs.org/docs/messages/module-not-found

Import trace for requested module:
./src/app/admin/page.tsx

I'm getting similar error for every .png and .svg being imported.

I'm trying to find all the responsible pieces for image importing and would be grateful for any tips.

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