AI-Driven 'Chipflation' Pushes Prices Higher than Trump's Tariffs
The rapid growth of artificial intelligence (AI) has created a surge in demand for computer hardware and memory, leading to increased prices. According to researchers at the Minneapolis Federal Reserve, this 'chipflation' is adding as much to core inflation as President Donald Trump's tariffs.
The AI boom has led to higher costs for products such as laptops, tablets, smartphones, and gaming consoles. The hardware needed for building and running AI systems is in high demand, pushing up prices across the technology sector.
Core personal consumption expenditures (PCE) inflation rose to 3.3% year over year through July, with clothing and footwear prices increasing from 0.3% in December 2025 to 3.5% in July.
The impact of tariffs is still being felt by consumers, with some industries such as new cars not yet fully passing on higher costs. Researchers predict that more price increases could reach consumers in the months ahead.