The sharp rise in memory chip costs, fueled by unprecedented demand from AI data centers, has begun to put considerable pressure on core inflation in the US. Wolfe Research analysts warn that as these costs spread throughout the consumer electronics supply chain, price pressures will only increase.

In her review, analyst Stephanie Roth notes that the rise in memory prices has already added about 30 basis points to the core consumer spending index (PCE). The introduction of AI was expected to make technology cheaper. However, in practice one of its first effects was the price increase , - emphasizes the expert.

The anomaly was caused by a huge demand for DRAM and NAND memory for AI infrastructure, which resulted in chips being priced 2-6 times higher. Computer iron, which has been a reliable source of deflation for decades, is now experiencing its fastest price increase in recent decades.

Apple’s recent price increase is a case in point of shifting these costs onto consumers. Wolfe estimates that the MacBook, iPad and iPhone price increase could add another 5 basis points to the base PCE. Data from TechInsights show that the increase in memory and storage costs could increase the cost of iPhone components by 25%. If manufacturers decide to shift these costs entirely to customers, retail prices for smartphones could skyrocket by more than $200.

The only mitigating factor may be a change in methodology. Starting in September, the US Bureau of Economic Analysis (BEA) will revise its approach to calculating software components in the PCE core index. Wolfe estimates that this technical adjustment could artificially reduce the inflation rate by about 10 basis points, but fundamental pressure from the memory market will remain unchanged.