In a note to clients on Wednesday, Goldman Sachs analysts Manuel Abecasis and Hongcen Wei forecasted that consumer electricity inflation would jump 6% from 2026 to 2027 before decelerating to 3% the following year owing to lower natural gas prices. But larger electric bills for businesses like hospitals and restaurants mean more costs being passed down to consumers, Goldman Sachs warned—it’s called inflation. “Higher power prices will also put upward pressure on core inflation by raising business production costs,” Abecasis and Wei wrote.

Electricity prices have already swelled nearly 7% through December 2025, far above the headline 2.9% inflation rate, the bank noted. Moreover, utilities requested a record-high $31 billion in increased rates in 2025, more than twice the rate of 2024, according to data from nonprofit PowerLines.

While an aging grid, extreme weather, and increased natural gas prices have contributed to more than 25 years of ballooning electricity prices, now data centers are  gobbling up resources. And with Alphabet, Microsoft, Meta, and Amazon—considered the four major hyperscalers—projected to spend an eye-watering $700 billion on AI build-outs in 2026, these prices are unlikely to decrease anytime soon. Moreover, the individuals likely to pay for the exorbitant electricity to power these centers are more likely to be small businesses and working and middle-class Americans, analysts indicated.

“The income and spending drags will likely be larger for lower-income households because electricity accounts for a greater share of their spending, as well as for households in areas with higher concentrations of data centers where regional power markets will tighten more,” the note said.

The bank predicts higher electricity prices will boost core inflation by 0.1% in both 2026 and 2027, and by 0.05% in 2028, with the greatest fraction of that uptick coming from medical and food services. New vehicles and clothing will also see higher prices as an indirect result of higher utility bills, according to the note. 

Though the impact may seem small, Goldman Sachs saw a ripple effect on consumer spending and U.S. GDP, with greater electricity prices causing a 0.2% drag on consumer spending growth because of lowered disposable income, and by extension, a 0.1% drag on GDP growth in 2026 to 2027. Goldman Sachs estimated the productivity gains from AI would effectively wipe out any hit to GDP growth related to the effects of greater electricity costs.

How the middle class became burdened with data center expansion 

Customers’ electric bills go up as a result of capital investments in new grid infrastructure and subsequent rate increases, as well as data centers tightening electricity supply. 

Following approval of these contracts, construction begins swiftly, increasing demand for not just electricity, but raw materials and labor. With supply stretched, these resources become more precious, and more expensive, for other businesses in the areas surrounding data center construction, according to Fordham University economics professor Marc Conte.

“The urgency with which they’re trying to engage in this massive expansion, that also is going to be inflationary,” Conte told Fortune, “because they’re willing to pay well above current price to get something done sooner, and so that can trickle down.”

Addressing rising costs associated with data center construction has become a hot-button election issue. On Wednesday, Sens. Josh Hawley and Richard Blumenthal introduced the Guaranteeing Rate Insulation From Data Centers (GRID) Act that would prevent data-center-related price increases from affecting consumers’ utility bills, and prioritize grid access for consumers outside of data centers. Anthropic announced the same day intentions to cover the increases in electricity prices from its data centers, but did not share details on the deals with electricity companies.

Conte likens the rapid data center expansion to a city’s decision to build a new sports stadium. While the payoff potential could be an economic boon, the sacrifices needed to finance the undertaking are not without risk to an area’s millions of residents.

“We’re putting a lot of trust into these companies,” Conte said. “We’re allowing them to do things that they are admitting are going to be incredibly disruptive, with disproportionate burdens falling across [households].”