AI buildout expected to keep inflation elevated through year-end

Data center investment topping $700 billion pushes up chip and electricity costs

The artificial intelligence buildout, expected to top $700 billion in investment this year, is pushing up prices for memory chips, computer processors, and electricity, the Associated Press reported. Economists said the spending will continue to push up inflation at least through the end of 2026.

The surge of investment in data centers to power artificial intelligence has made memory chips, computer processors, and other equipment, as well as electricity, more expensive, according to the AP. While the price increases are not expected to be as large as the spike in 2021-2023, when inflation peaked at 9.1%, the persistent pressure could lead the Federal Reserve 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, the AP reported.