{"id":82877,"date":"2026-07-14T15:31:35","date_gmt":"2026-07-14T15:31:35","guid":{"rendered":"https:\/\/www.europesays.com\/britain\/82877\/"},"modified":"2026-07-14T15:31:35","modified_gmt":"2026-07-14T15:31:35","slug":"ai-boom-replaces-oil-as-key-inflation-risk-says-barclays-4","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/britain\/82877\/","title":{"rendered":"AI boom replaces oil as key inflation risk, says Barclays"},"content":{"rendered":"

\"AI<\/a> AI boom replaces oil as key inflation risk, says Barclays Proactive uses images sourced from Shutterstock <\/p>\n

Artificial intelligence is emerging as an unexpected source of inflationary pressure, complicating the US Federal Reserve’s battle against rising prices even as oil markets have calmed, according to Barclays. <\/p>\n

The bank argues that while investors had been\u00a0focused on the fading impact of the Iran-related oil shock, the bigger story is that inflation has become broader and more persistent. <\/p>\n

Brent crude retreated to a four-month low after the US-Iran ceasefire agreement was signed last month, yet Barclays has raised its forecast for core personal consumption expenditure inflation to 3.3% by the end of the 2026 calendar year from 2.8% at the start of the year. <\/p>\n

Rather than energy, the bank says AI investment is now contributing to higher prices. <\/p>\n

Demand for data centres has pushed up memory chip costs, feeding through to computer hardware and software prices. <\/p>\n

To illustrate the issue, the analysts point out that computer software and accessories \u2013 “the category within both the CPI and PCE price indices that carries the clearest imprint of the explosion in memory chip prices” \u2013 has jumped 17% since last December, “after having been in deflation for much of its history”. <\/p>\n

“Robust data center demand, constrained supply, and long-dated purchasing agreements are keeping memory prices high, and those rising costs are filtering through into personal computers and other hardware.”\u00a0 <\/p>\n

At the same time, electricity prices have risen as power demand from AI infrastructure has increased. <\/p>\n

Barclays estimates AI-related categories have added about 20 basis points to core PCE inflation and 25 basis points to headline PCE in recent months. <\/p>\n

This is particularly important as computer software and accessories carry far greater weight in what has been the Fed’s preferred PCE inflation measure than in the consumer prices index. <\/p>\n

The bank also argues the economy has remained resilient enough to absorb higher costs rather than destroy demand. <\/p>\n

Strong travel activity, robust retail spending and resilient consumer demand have allowed businesses to pass on higher prices. <\/p>\n

For the Fed, Barclays believes that means the inflation challenge has shifted, and even if oil prices resume their fall, this alone is unlikely to deliver the disinflation policymakers had hoped for. <\/p>\n

The third quarter is going to be “noisy and uncomfortable” for investors, the analysts said, even if the underlying trajectory of energy prices is improving. <\/p>\n

“Rates will stay higher for longer than the oil price alone would suggest,” they said, meaning longer-dated Treasury notes will stay under pressure, meaning higher yields. <\/p>\n","protected":false},"excerpt":{"rendered":"AI boom replaces oil as key inflation risk, says Barclays Proactive uses images sourced from Shutterstock Artificial intelligence…\n","protected":false},"author":2,"featured_media":82878,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[21264],"tags":[7077,3343,7493,8570,36361,36362,225,33370],"class_list":["post-82877","post","type-post","status-publish","format-standard","has-post-thumbnail","category-barclays","tag-oil-prices","tag-barclays","tag-electricity-prices","tag-inflation-data","tag-inflation-risk","tag-inflationary-pressure","tag-oil","tag-us-federal-reserve"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@UnitedKingdom\/116919054191226867","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/82877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/comments?post=82877"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/posts\/82877\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media\/82878"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/media?parent=82877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/categories?post=82877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/britain\/wp-json\/wp\/v2\/tags?post=82877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}