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A recent Bloomberg New Energy Finance analysis finds 100 GW of on-site gas-burning capacity are planned to power data centers across America. That’s equivalent to 18% of the total existing capacity of all U.S. natural gas power plants, a staggering amount.

Building your own natural gas power plant might appear to protect other energy customers by reducing new demand on the grid, but that’s not the case. Natural gas is a market-traded commodity, meaning data centers that gobble up lots of natural gas will naturally compete with other gas customers, increasing prices.

The Producer Price Index final demand (PPI), which tracks inflation in prices that companies pay each other, spiked by 1.06% in May from April (+13.4% annualized), seasonally adjusted, for the second month in a row, and both of these month-to-month spikes back-to-back were the worst since the spike in March 2022 (blue in the chart).

Year-over-year, the PPI spiked by 6.4%, the worst since December 2022, according to data from the Bureau of Labor Statistics today (red in the chart).

But it’s not just energy: The 6-month “core” PPI, which excludes food and energy, rose by 6.2%, the worst since August 2022. The 6-month services PPI, also rose by 6.2% annualized, worst since June 2022. The 6-month “core” goods PPI, which excludes food and energy, jumped by 6.6% annualized, worst since August 2022. There is a lot of inflation going on in here.

Prices increased at a moderate to strong pace overall, with most Districts reporting higher inflation than the previous report. Districts noted that energy-related costs tied to the conflict in the Middle East were the primary driver of inflationary pressures, with spillovers into shipping, packaging, groceries, and fertilizer. Non-labor input costs continued to rise faster than selling prices, contributing to broader concerns about margin compression. The ability to pass on higher costs remained mixed across sectors, particularly among consumer-facing firms. Consumer uncertainty and concerns about fuel prices impacting households were noted by several Districts. Several regions highlighted inflation mitigation strategies of firms that ranged from supply-chain optimization, product adjustments, reduced offerings, and temporarily absorbing higher costs to preserve customer demand.

The Office of the U.S. Trade Representative has proposed additional tariffs of up to 12.5% on imports from 60 economies over their failure to ban goods made with forced labor, in a sweeping action that would hurt most trading partners, including China, the European Union and Japan.