Trump tariff costs now reaching consumers, AI factors equally driving up inflation: What Fed analysis reveals
Researchers at the Minneapolis Federal Reserve revealed that massive AI demand on memory and computer hardware drove up core inflation as much as the tariffs President Donald Trump imposed early last year.
A new analysis from the Minneapolis Federal Reserve has revealed that tariffs imposed by the Trump administration and factors related to artificial intelligence (AI) have now reached similar levels of contribution to elevated core inflation in the United States. The study found that by mid-2026, tariffs and AI-related demand on memory and computer hardware were both contributing to core inflation, which remained above the Federal Reserve's target levels.
While tariffs accounted for 0.2 to 0.4 percentage points of core inflation as of July 2026, AI-driven demand for memory and computer hardware pushed up prices for video and information processing equipment by 12.2 percent year-over-year, adding roughly 0.4 percentage points to core PCE inflation. Despite the surge in AI hardware demand, prices for video and information processing equipment were still falling at an annual rate of 6.5 percent compared to 2015-2019.
The study also noted that even without the impact of tariffs, core PCE inflation would still be about 1 percentage point above the Fed's 2% target.
Brief written by urgent.news from Live Mint's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
