Goldman Sachs projects that core PCE inflation will remain elevated into late 2026 and then fall sharply in 2027 as influences tied to artificial intelligence and energy passthrough subside, according to analyst Manuel Abecasis.
Abecasis’ forecasts call for year-over-year core PCE inflation of 3.2% by December 2026, with a drop to 2.2% by December 2027 "as the AI and energy effects wane." Goldman’s view for core consumer price index (CPI) inflation is somewhat lower in the near term but converges in 2027: the bank sees core CPI at 2.6% year-over-year by December 2026 and 2.2% by December 2027.
The firm notes that a recent U.S.-Iran agreement has eased near-term pressures. Goldman’s commodity strategists cut their oil price outlooks to an average of $80 per barrel in Q4 2026 and $75 in 2027. Those revisions translate into roughly 0.2 percentage points and 0.05 percentage points less upward pressure on headline and core PCE inflation this year than the bank had previously assumed.
Goldman’s preliminary estimates for June show a headline CPI change of -0.13% and a PCE change of 0.07% for that month.
The bank highlighted that AI-related demand has been an underappreciated source of inflation through its effect on memory prices. That dynamic has pushed up inflation in computer software and accessories, in part because measurement distortions amplify those components’ contribution to core PCE.
On that point, Goldman expects monthly inflation for software and accessories to slow markedly - from roughly 4-5% in recent months to about 0.6% by the fourth quarter of 2026.
Looking beneath headline numbers, Abecasis retained a generally constructive view on underlying inflation trends. He expects rent growth to decelerate to a pace below the pre-pandemic norm, while nominal wage growth should exert downward pressure on core nonhousing services inflation.
Nonetheless, the bank cautions that risks are skewed to the upside on net, with particular attention to the potential for renewed deterioration in the Middle East to reintroduce inflationary pressures.
Impacted sectors and markets
- Energy and commodity markets - through revised oil price assumptions and the effect on headline inflation.
- Technology sector - especially producers and purchasers of memory and software where AI-driven demand has influenced measured inflation.
- Housing and services - rent trends and nominal wages affect core nonhousing services inflation.