# Fed blames AI for 3% rise in core inflation as of May 2026 > Source: > Published: 2026-07-08 18:13:14+00:00 https://en.wikipedia.org/wiki/Eccles_Building # Fed blames AI for 3% rise in core inflation as of May 2026 June inflation US - annual The Federal Reserve has attributed the recent increase in core goods price inflation to the influence of artificial intelligence (AI), alongside existing tariff pressures. According to the Federal Reserve, AI-related price pressures have contributed significantly to the 3.4% annualized rise in core inflation as of May 2026. While some Federal Reserve participants acknowledge that AI adoption could eventually lead to productivity gains that reduce production costs, they caution that this effect may take time to materialize. The current situation complicates the Federal Reserve’s path to potential rate cuts, with markets suggesting an increased likelihood of policy tightening in the near future. ## Key Takeaways - Markets suggest that the Federal Reserve’s attribution of inflation to AI may influence inflation expectations, potentially impacting the likelihood of inflation remaining at or below 3.6%. - Current core PCE inflation is at 3.4% annualized, reflecting significant upward pressure from AI-related investment demand and tariffs. - The Federal Reserve’s acknowledgment of AI’s role in inflation indicates continued attention to AI-related factors in future monetary policy decisions. ## What to Watch Market participants will be closely monitoring upcoming inflation data releases, particularly the U.S. CPI year-over-year print for June 2026. Any unexpected acceleration in core inflation could reinforce expectations of Federal Reserve policy firming. Additionally, statements or minutes from the Federal Reserve’s meetings may provide further insights into how AI-driven price pressures are influencing monetary policy. Observers will also watch for any shifts in AI adoption trends and their potential impact on production costs and inflation dynamics. *Get prediction market intelligence as a structured API feed. Early access waitlist.* **Disclosure:** This article was edited by Estefano Gomez. For more information on how we create and review content, see our [Editorial Policy](https://cryptobriefing.com/editorial-policy/).