Goldman Sachs believes U.S. inflation will remain relatively elevated through the end of 2026 before slowing considerably in 2027 as the impact of artificial intelligence-related pricing distortions and energy-driven inflation gradually fades.
Analyst Manuel Abecasis forecasts core Personal Consumption Expenditures (PCE) inflation will reach 3.2% year-over-year by December 2026 before easing to 2.2% by the end of 2027 “as the AI and energy effects wane.”
The bank also projects core Consumer Price Index (CPI) inflation, which Goldman says is “less affected by AI measurement issues and stock market swings,” will moderate to 2.6% year-over-year by December 2026 and further decline to 2.2% by December 2027.
Lower Oil Forecasts Reduce Inflation Risks
Goldman noted that the recent agreement between the United States and Iran has helped ease some near-term inflation concerns.
Following the development, the bank’s commodity strategists lowered their oil price forecasts to an average of $80 per barrel in the fourth quarter of 2026 and $75 per barrel in 2027. According to Goldman, these revised assumptions imply roughly 0.2 percentage points less upward pressure on headline PCE inflation and 0.05 percentage points less pressure on core PCE inflation this year compared with previous estimates.
The bank’s preliminary forecasts for June point to headline CPI falling 0.13% month-over-month and headline PCE rising 0.07%.
AI-Driven Price Distortions Seen as Temporary
Goldman argued that inflation linked to artificial intelligence has been underestimated by many market participants.
The firm said rising memory-chip prices have contributed to stronger inflation readings for software and computer accessories, with statistical measurement effects magnifying their influence on core PCE data.
As these distortions ease, Goldman expects monthly inflation for software and accessories to slow significantly, falling from roughly 4% to 5% in recent months to around 0.6% by the fourth quarter of 2026.
Underlying Inflation Trends Remain Constructive
Beyond AI and energy-related factors, Goldman maintains a relatively positive outlook for underlying inflation trends.
Abecasis expects rental inflation to decelerate to a pace below pre-pandemic levels, while moderating wage growth should help reduce inflation within core services excluding housing.
Despite the improving outlook, the bank cautioned that inflation risks have not disappeared entirely.
Goldman said risks remain “skewed to the upside on net, particularly if the situation in the Middle East deteriorates.”