Goldman Sachs expects U.S. inflation to stay above target through 2026 before moving closer to the Federal Reserve’s objective in 2027, helped by easing energy costs and a reduction in AI-related pricing distortions.
According to analyst Manuel Abecasis, core PCE inflation is projected to reach 3.2% year-over-year by December 2026 before falling to 2.2% a year later “as the AI and energy effects wane.”
The bank also expects core CPI inflation, which it says is “less affected by AI measurement issues and stock market swings,” to slow from 2.6% at the end of 2026 to 2.2% by December 2027.
U.S.-Iran Deal Supports Lower Oil Outlook
Goldman said recent diplomatic progress between Washington and Tehran has reduced near-term inflation pressures by improving the outlook for energy markets.
The bank lowered its forecast for average oil prices to $80 per barrel in the fourth quarter of 2026 and $75 per barrel in 2027. Those revisions are expected to reduce upward pressure on both headline and core PCE inflation relative to previous assumptions.
For June, Goldman’s preliminary estimates point to a 0.13% monthly decline in headline CPI and a 0.07% increase in headline PCE.
AI-Related Inflation Impact Expected to Moderate
The bank highlighted memory-chip pricing as an overlooked contributor to recent inflation data, particularly through its impact on software and computer-related categories.
Goldman believes these effects should gradually diminish, with monthly inflation in software and accessories slowing from roughly 4%–5% recently to about 0.6% by late 2026.
Housing and Wage Trends Offer Additional Relief
Goldman remains constructive on broader inflation dynamics, expecting rent inflation to cool below pre-pandemic trends while slower wage growth helps reduce inflation in core services outside housing.
However, the bank cautioned that upside risks remain.
Goldman said inflation risks remain “skewed to the upside on net, particularly if the situation in the Middle East deteriorates.”
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