AI data center spending lifts chip and electricity prices

Four large technology companies are expected to invest $720 billion this year, mostly on data centers to support artificial intelligence. The spending has increased demand for semiconductors, pushing up prices for memory chips by as much as 400 percent between 2024 and the end of this year, according to economists at JPMorgan Chase.

Electricity prices rose 5.9 percent in May from a year earlier, outpacing overall inflation of 4.2 percent. Data centers are absorbing a growing share of new electrical capacity, and utilities are adding more power plants to meet the demand.

Consumer electronics prices Apple raised prices on laptops and iPads by 15 to 25 percent last month. A top MacBook now costs $1,999, up from $1,699. Microsoft said the price of its Xbox console will increase by $100 on Aug. 1. Sony, Dell Computer, and HP have also raised prices on their products.

"The rapid expansion of AI data centers has created an extraordinary surge in demand for memory and storage," Apple said in a statement.

outlook Core inflation, the Federal Reserve's preferred measure, stood at 3.4 percent in May. Some economists now expect it to decline only slightly by year-end, remaining above the central bank's 2 percent target. Officials will review June's inflation report, scheduled for release Tuesday, for signs of further AI-related price increases.

The Fed typically looks through temporary price shocks, but officials have expressed concern that repeated increases could keep inflation elevated. One official said sustained demand pressure relative to supply could prompt a different response.