A Minneapolis Federal Reserve analysis found that the Trump administration's tariffs and surging demand for artificial intelligence hardware are each contributing roughly 0.4 percentage points to elevated U.S. core inflation, although the study estimated the tariff contribution at 0.2 to 0.4 percentage points as of July 2026. Core Personal Consumption Expenditures inflation, the Federal Reserve's preferred measure excluding food and energy, reached 3.3% year over year through July, its highest level since 2023 and, outside the pandemic period, since the early 1990s. AI-related demand for processors, graphics chips, video RAM, storage and cooling systems drove video and information-processing equipment prices up 12.2%, reversing an annual decline of 6.5% from 2015 to 2019. The researchers said core PCE inflation would still be about one percentage point above the Federal Reserve's 2% target without tariffs, while delayed tariff pass-through and planned business price increases could add further pressure.