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Tariffs Finally Showing Up In Inflation Stats-And So Is AI
Forbes • • business
Key Points:
- Researchers at the Minneapolis Federal Reserve found that high demand for AI-related memory and computer hardware has increased core inflation as much as the tariffs imposed by President Trump in early 2023.
- Despite tariffs, core PCE inflation would still be about one percentage point above the Federal Reserve’s 2% target, indicating inflationary pressures beyond trade policies.
- Prices for video and information processing equipment, which were falling at a 6.5% annual rate from 2015 to 2019, surged by 12.2% due to AI hardware demand, a phenomenon dubbed "chipflation."
- The rapid investment by major tech companies in AI has created supply-demand imbalances for critical hardware components, driving up costs for consumer products like laptops, tablets, smartphones, and gaming consoles.
- Additional tariff-related price increases are expected as some sectors, including new cars, have not yet fully passed on cost hikes, and businesses plan further tariff-driven price adjustments.
