Inflation took a little breather for consumers, as the consumer price index report showed Tuesday. It was a similar story today for wholesalers: prices fell 0.3% in June — which is all good for anyone who buys stuff. But the curious thing is that compared to other developed nations, the U.S. has higher inflation. It’s the highest in the G7 — that includes Japan, France, the UK, Canada, Italy, and Germany.Over in Germany, inflation is 2.4%. In Japan, it’s 1.5%. And the U.S. is stuck with 3.5%. In part, America did this to itself.“One force that is pushing inflation up here, of course, is the tariff situation,” said Stephen Stanley, chief U.S. economist for Santander Bank’s U.S. Capital Markets. “Or [it] has been.”But tariffs have pretty much run their course: they happened, they’re here, but they’re probably not going to increase much more — although, who knows. So, there’s more going on that is making American inflation worse.“What it comes down to, I think, is that the U.S. economy is just much stronger,” Stanley said. “We’re running hotter than many other countries.”Usually, inflation is what you get when an economy is overheating in some way. And for the U.S., one fuel feeding the fire is AI.“AI has driven a lot of [capital expenditure],” said Stephen Juneau, a senior U.S. economist at the Bank of America Securities.Capital expenditure as in tech companies have been spending a lot: an estimated $800 billion this year in the U.S.“That [capital expenditure] has also led to upward pressure on prices for certain consumer products,” Juneau said. “Think about your computer, right? You’re paying more for RAM. Think about anything that has a GPU in it; there’s upward pressure.”Also, AI has driven up the stock market, and so people with stocks feel better about spending, and there is just more pressure on prices. Bottom line: the U.S. has more inflation for the same reason it has strong economic growth . So, thanks AI? But inflation is still bad — and there’s a big catch here.“The growth is fairly concentrated,” said Christopher Hodge, chief economist for the U.S. at Natixis Corporate and Investment Banking. “Consumer durable goods purchases, residential construction, commercial construction — that’s all lagging.”That could help control prices over the rest of the summer.“So, if I look further out the horizon,” Hodge said, “It’s hard for me to see what’s coming to accelerate inflation.”