Americans keep getting walloped by rising prices, including from the Iran war that is making it painful to buy gasoline. Now there’s another culprit for sticker shocks: artificial intelligence.
As AI companies sink hundreds of billions of dollars into developing their technology and building out computer hubs to run AI, their spending is likely pushing up inflation in the United States, according to some Federal Reserve officials and Wall Street assessments.
That’s largely due to technology companies’ insatiable need for computer equipment, land, specialized workers and electricity to erect data centers across the country that underpin AI services. Americans can feel the domino effects from the AI boom in the climbing prices for some consumer gadgets, electric bills and more.
Proponents of AI, including in the Trump administration and Silicon Valley, say that it will lift economic growth, unleash workers to do more with less effort and lower prices — eventually. Much of that promised payoff remains potentially far in the future, while Americans are feeling price increases triggered by AI today for products that may have little to do with the technology.
“We are going through this period of pain,” said Pooja Sriram, U.S. senior economist at the Barclays investment bank. “It’s going to be this world where we get better compute power and much better software as consumers, but we’re going to have to grapple with slightly higher prices.”
These are four ways Americans are paying more as a result of AI mania.
Consumer electronics
Nintendo’s Switch 2 will cost $500, up from $450
AI giants are stuffing enormous volumes of computer chips inside their data centers. That has cascaded into shortages and higher prices for chips needed for laptops, smartphones, cars, streaming TV devices and video game devices.
Nintendo said last month that it’s raising prices for its newest handheld video game console. The company said it had little choice because it’s absorbing the equivalent of $624 million in additional costs this year, including for computer chips and tariffs imposed by the Trump administration.
Elon Musk and executives of Apple, Dell and Ford are among those talking in sometimes apocalyptic terms about the AI-triggered cost spike and shortages of computer chips — and in some cases factoring them into higher product prices.
AI-related hits to consumer electronics are probably going to get much worse, said Francisco Jeronimo, an analyst with the research firm IDC.
GoPro, the struggling maker of video cameras for action sports, said this week that AI-driven computer chip price increases and shortages have helped put the company at risk of being unable to keep operating.
Jeronimo said the AI cost cascades could push companies to eliminate some products or sell to competitors, as he expects GoPro to do. The company did not respond to a request for comment.
Electricity
Maryland electric bills jump to $181 a month from $122
The Maryland Office of People’s Counsel, a quasi-government advocate for residential utility customers, said that data centers are pushing up bills, in response to a query from The Washington Post. It calculated a ballpark average monthly bill this year compared with 2022 for typical household electricity usage for customers of five Maryland utility companies.
PJM Interconnection, the electric grid operator for Maryland and a dozen other states, has been socked with rising costs including from the surging demand of electricity-guzzling data centers. That’s translating into higher household electric bills that have prompted complaints from residents and action from elected officials.
The People’s Council said it’s hard to pinpoint exactly how much data centers are responsible for higher electric bills in Maryland. But it said they are pushing up every component in a monthly bill, including about $10 a month for costs related to keeping the grid reliable.
In an example of how electricity cost increases can have ripple effects, the University of Maryland this week said it laid off 84 people, citing financial challenges including soaring energy bills.
“We share customer frustrations around high energy costs,” said a spokesman for Exelon, which owns several utility companies operating in Maryland. “If we want to get energy costs under control, we have to bring more power online quickly and responsibly.”
Software subscriptions
QuickBooks Plus subscription: $115 a month, up from $99
Software used by millions of households, small businesses and nonprofits is getting more AI features — with higher price tags.
A Goldman Sachs economic analysis last month said that prices for software such as Microsoft Office, Duolingo’s language-learning app and Adobe photography tools have increased by as much as 50 percent in the past 18 months. Many of the price increases were associated with new AI features, the analysis said.
AI features can increase costs for the software makers, give them an excuse to raise prices or result in a more useful product.
Intuit last summer raised the list price of its QuickBooks software widely used for budgeting and accounting. The higher price reflects how new AI features save users time and money, an Intuit spokeswoman said.
Duolingo raised the price of its most popular subscription from about $85 a year to about $96. (The cost varies, and existing users may continue to pay lower prices.) Most people use Duolingo free, but the company also rolled out a change that it told investors nudged some free users to start paying.
Duolingo said in a statement that it is extending AI features previously limited to higher-price subscriptions to users who pay less or nothing.
Apple computers
Apple’s Mac Mini starts at $799, up from $599
You can blame AI companies and AI-crazed nerds for this one.
The brick-style Mac Mini computer became the go-to choice this year for enthusiasts installing customizable AI “agents” that attempt to perform digital chores with little human oversight on a personal computer.
Mac Mini computers sold out widely as people set loose agents to respond to emails or book vacations. Apple stopped selling the cheapest model about a month ago, and the $799 version is now the least expensive option.
Apple didn’t publicly explain the change or respond to a request for comment. Like peers at Nintendo and other electronics companies, Apple executives have said that the company can’t affordably buy the computer chips it needs to make all the iPhones and computers that people want to buy.
Apple is being squeezed twice by AI. A higher-than-expected crush of AI-inspired buyers tends to push up product prices due to scarcity. And Apple must pay more to compete with AI companies throwing cash at computer chip factories.
There’s an irony for AI companies that caused all these cost pressures: They’re feeling it, too.
Meta and Microsoft said recently that they’re spending a combined tens of billions of dollars more than they expected to build AI data centers. News reports said that AI computer chip titan Nvidia will not make its yearly update to a chip for video game systems due to shortages. The company didn’t respond to a request for comment.
The reason those AI companies are hoarding or paying more for computer chips? Because AI companies are buying all the chips.
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