Experts say AI is contributing to higher inflation.
CNN reports that while AI can lead to favorable outcomes related to innovation and productivity, its presence also has more immediate negative consequences, whether that be disruptions to the job market or a rise in inflation, as AI investments now approach $750 billion.
“The higher inflation means that households must spend just over $375 more to purchase the same goods and services as they did this time last year due to AI’s inflationary impact,” Mark Zandi, chief economist at Moody’s Analytics, told CNN.
Electricity Use
Specific areas experiencing inflation include electricity. Some data centers are consuming large amounts of electricity and water. There are currently more than 4,600 active data centers in the U.S., according to the Data Center Map.
“Data centers are demanding huge amounts of power, and that’s tending to crowd out the electricity available to distribute to residents; it’s also led to wholesale electricity prices being bid up, because data centers are willing to pay the price that providers ask them for, and that ends up also raising the prices for residential electricity costs,” Barclays U.S. economist Pooja Sriram told CNN.
In 2025, residential electricity use nearly doubled, rising twice as fast as in prior years, per data from the US Consumer Price Index. That rate is already accelerating in 2026, according to the Bureau of Labor Statistics.
Overall, electricity prices are up 4% in inflation terms compared to a year ago, CNN reports.
Memory Chip Demand And Supply
Inflation has also reached memory chips, due not only to demand but also to a “constrained” supply chain, Sriram said. Fewer memory chips are being made for standard consumer products, with production now prioritizing high-performance memory chips for data centers.
“Why this matters for the end consumer is, at the end of the day, our laptops, computers, iPhones, iPads all have some sort of memory chip embedded in that hardware, and those chips have become quite expensive,” she told CNN.
Consumer Goods Price Hike
Not surprisingly, prices have increased for consumer products, including Sony’s PlayStation and Microsoft’s Xbox consoles as well as computers for the aforementioned reasons.
Software is also seeing an uptick as companies integrate AI features. Examples include Microsoft 365, which rose by 43% in February. Microsoft 365 is within the Microsoft portfolio, and the tech company has been investing heavily in its AI tools such as Copilot. In fact, it invested $37.5 billion in AI tools during fiscal 2026’s second quarter, according to Windows Central.
Apple also raised the price of the iPhone, Moody’s Zandi said in an interview with CNBC.
Federal Reserve officials are currently monitoring AI’s impact on inflation, CNN reports.
