Neil Mehrotra and Michael E. Waugh, researchers at the Federal Reserve Bank of Minneapolis, set out to measure how much of the past year’s stubborn inflation actually traces back to tariffs. One category kept throwing off their numbers: computers, televisions and other video and information-processing equipment, whose prices climbed 12.2 percent over the year through July even though the category has largely escaped the duties hitting furniture, apparel and other goods. Their explanation points less at trade policy than at an artificial-intelligence investment boom competing for the same memory chips and components that go into ordinary consumer electronics.
The reversal is stark by historical standards. Between 2015 and 2019, prices for this category fell by about 6.5 percent a year as manufacturing efficiency and global competition pushed costs down. That decade of falling prices has flipped into double-digit annual growth, a shift the two researchers say is large enough on its own to move the inflation gauge the Federal Reserve watches most closely.
A category the Fed set apart from tariffed goods
Mehrotra, an assistant vice president and policy advisor at the Minneapolis Fed, and Waugh, a monetary advisor there, built their tariff estimates on an accounting framework that uses input-output tables to convert country- and industry-specific duties into cost shocks moving through supply chains. When they compared those predicted tariff effects against actual price changes across dozens of core-goods categories, video and information-processing equipment stood out as an exception rather than a confirmation. The researchers excluded it from that tariff comparison specifically because the category has largely been free of the levies applied elsewhere, even as its own prices ran far hotter than the tariff story could explain.
Inside the kit: A double-digit jump in electronics prices lands in the same household budget as property-tax bills and utility statements. The heating, cooling and home-repair help and the application log and renewal calendar inside The Senior Property Tax & Home-Cost Relief Kit give the fixed side of that budget somewhere to track.
From a decade of falling prices to a 12.2 percent jump
Video and information-processing equipment carries a weight of 2.4 percent in the personal consumption expenditures price index, the inflation gauge the Federal Reserve targets, but its recent swing punches above that share. Prices in the category were up 12.2 percent year over year through July, according to the Minneapolis Fed’s August 28 analysis, compared with a 6.5 percent average annual decline in the same category from 2015 through 2019. That combination — a modest slice of the overall spending basket moving from steady deflation to double-digit inflation in a matter of months — is what let the category punch above its weight in Mehrotra and Waugh’s calculations.
A narrower slice of the same story shows up in the government’s own monthly price data. The Bureau of Labor Statistics’ consumer price index for computers, peripherals and smart home assistants, tracked separately from the Fed’s broader research category but pointed in the same direction, climbed from an index value of 35.6 in April to 36.6 in July and 38.0 in August, a steady rise over the same stretch the Minneapolis Fed’s analysis covers.
Four-tenths of a point that has nothing to do with duties
By the two researchers’ math, the swing in computer and television prices alone is adding about 0.4 percentage point to core PCE inflation, which stood at 3.3 percent year over year through July, the highest reading since 2023. That contribution sits alongside, not inside, their separate estimate that tariffs are adding 0.2 to 0.4 percentage point to the same core inflation measure. The two forces are distinct in the researchers’ framework: one runs through a global chip and component market reshaped by artificial-intelligence spending, the other through duties on imported furniture, apparel and other tariffed goods.
How much of the broader goods-inflation story this explains
Core goods overall — everything from furniture to apparel to electronics — were up 2.3 percent year over year through July, adding more than 0.7 percentage point to core PCE inflation compared with the 2015-2019 average, according to the same Minneapolis Fed analysis. Video and information-processing equipment’s 12.2 percent increase, and the roughly 0.4 percentage point it contributes on its own, accounts for well over half of that overall core-goods pressure, even though the category makes up only 2.4 percent of the core PCE spending basket. Few other categories move the needle by that much on their own.
What an earlier analysis from the same researchers missed
Mehrotra and Waugh flagged part of this dynamic months earlier. In an April 8 analysis, the pair found that core goods inflation running at 1.9 percent year over year did not line up with what a tariffs-only explanation would predict, and they wrote that artificial-intelligence-induced demand for electronics might account for some of the outsized price increases in the category. Five months later, with data through July in hand, that early hypothesis had firmed into a specific figure: a 12.2 percent annual price increase in a category their own accounting framework says tariffs barely touch.
A rising electronics bill sits beside a quieter property-tax one
A double-digit increase in computer and television prices shows up clearly on a single receipt. A property-tax bill or a utility statement that climbs the same year usually arrives without any research note attached, leaving the fixed side of a household budget to work out on its own.
The Senior Property Tax & Home-Cost Relief Kit lays out the five kinds of property-tax relief and the circuit-breaker credit that includes renters, giving that fixed-cost side of a budget somewhere to start comparing options.
See the five kinds of relief in The Senior Property Tax & Home-Cost Relief Kit.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources.
