CPI Electricity Price Surge

The Consumer Price Index for September was just released. Inflation is back. Year over year, the total rose 3%. The story about electricity was much worse. It rose 6.4%. 

The data show that inflation can occur even in the absence of tariffs. In the US, the electricity issue is supply and demand, and it will only get worse. AI data centers have become such large electricity users that some states have seen double-digit year-over-year increases in electricity prices. 

The price of electricity is heading for a reckoning. AI data centers have received hundreds of billions of dollars in investment. Every major tech company has committed capital. None can afford to fall behind is the most significant technological advance in history. US AI companies do not just compete with one another. The sector is growing fast in China, and has the financial support of the federal government.

AI Data Centers

In some states, the use of data centers is already overwhelming. It is 26% of the electricity supply in Virginia

Electricity is increasingly included in the cost-of-living index, particularly as its costs rise rapidly. And it becomes a larger component of total house energy use as gas and oil prices fall.

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