According to new analysis from LSEG Data & Analytics, AI spending is becoming a demand story with real consequences for inflation, as US price pressures remain stubbornly above the Federal Reserve’s target. CPI climbed 3.8% year-on-year in April, up from 3.3% in March, while core inflation edged up to 2.8% from 2.6%. Energy and shelter costs drove much of the increase, and producer prices rose at an annual rate of 6%. Treasury yields have pushed higher, and long-dated TIPS yields have hit their highest levels in over a year. Newly appointed Federal Reserve chair Kevin Warsh has backed price stability when inflation risks are elevated, while suggesting AI-driven supply-side improvements could moderate inflation over time. Prices for computer software and accessories have risen nearly 14% over 12 months, while wholesale electronic component prices jumped 28%. Computer imports more than doubled in Q1 2026 year-on-year, semiconductor imports up 40% and computer accessory imports up 37%. US electricity production rose 2.5% in 2024 and 2.4% in 2025, with data centres a contributing factor. Leading AI firms collectively committed an estimated $300bn to capital expenditure in 2025, and the five largest US hyperscalers are projecting combined capex of roughly $720bn in 2026. Microsoft reported an annualised AI revenue run rate above $37bn, up more