Massive data center buildout poses latest inflation threat for consumers

By — Christopher Rugaber, Associated Press Christopher Rugaber, Associated Press Leave your feedback Share Copy URL https://www.pbs.org/newshour/economy/massive-data-center-buildout-poses-latest-inflation-threat-for-consumers Email Facebook Twitter LinkedIn Pinterest Tumblr Share on Facebook Share on Twitter Massive data center buildout poses latest inflation threat for consumers Economy Jul 14, 2026 2:21 PM EDT WASHINGTON (AP) — American consumers — and the Federal Reserve — are being hit with another high-cost headache. The gusher of investment in data centers — likely topping $700 billion this year — to power artificial intelligence has made memory chips, computer processors and other equipment, as well as electricity, more expensive. Economists expect it will continue to push up inflation at least through the end of this year. While it won't be as large a spike as occurred in 2021-2023, when inflation peaked at 9.1%, massive AI spending is likely to keep prices rising more quickly than the Federal Reserve would like. Such increases could lead the central bank to lift its key interest rate later this year to cool spending and bring down inflation. Higher rates from the Fed often boost borrowing costs for auto loans, mortgages, and business loans. Fed officials will closely watch June's inflation report, to be released Tuesday, for further signs of AI's impact on prices. Inflation last month likely cooled as gasoline prices have fallen after a ceasefire was reached between the U.S. and Iran, though whether that trend continues is now unclear as the U.S. and Iran have resumed fighting. AI spending is lifting prices for consumer electronics Just four large tech companies — Google parent Alphabet, Amazon, Meta Platforms, and Microsoft — are expected to invest $720 billion this year, mostly on data centers. Those data centers use a lot of semiconductors, and chip supplies have run low. As a result, economists at JPMorgan Chase estimate that the cost of some computer memory chips will have soared by as much as 400% between 2024 and the end of this year. Americans are already seeing higher prices for a range of consumer electronics, including laptops, smartphones, video game consoles, and computers. Electricity prices are also jumping as data centers absorb a growing share of new electrical capacity. READ MORE: Energy, water use and pollution of AI and data centers rival most countries In a high-profile announcement last month, Apple announced it was boosting prices for laptops and iPads by about 15% to 25%. A topline MacBook will now cost $1,999, up from $1,699. Many analysts expect price hikes will come for iPhones next. "The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage," Apple said in a statement. "We have never seen a component price increase this much, this quickly." On the same day, Microsoft announced that the price of its Xbox video game console will increase $100 by Aug. 1, citing hig