Goldman Sachs analysts anticipate that the U.S. core Consumer Price Index (CPI) inflation will slightly surpass expectations in January, driven by rising housing and automobile prices. The bank also predicts that a potential increase in tariffs could limit the impact of declining inflation in the coming months.
Goldman Sachs projects a 0.34% month-over-month increase in core CPI inflation for January, exceeding the 0.3% market estimate. This is expected to push the annual core inflation rate to 3.19%, compared to the forecast of 3.1%.
Additionally, the overall Consumer Price Index (CPI) is anticipated to rise by 0.36% on a monthly basis, surpassing the 0.3% forecast, largely due to higher food and energy prices. The official CPI report is set to be released on Wednesday.
Despite a decline in U.S. inflation throughout 2024 due to the impact of higher interest rates, it became more persistent towards the end of the year, prompting the Federal Reserve to maintain a hawkish stance on monetary policy.
Goldman Sachs has warned that “escalating tariff policies” could reduce the deflationary effects stemming from adjustments in auto, rental, and labor markets in the coming months. This warning followed President Donald Trump’s decision to impose 25% tariffs on all steel and aluminum imports, after already implementing a 10% tariff on Chinese goods last week.
Trump has also hinted at the possibility of additional tariffs, raising concerns among analysts that this could further drive inflation higher, as U.S. businesses bear the cost burden of these tariffs. Goldman Sachs projects that core inflation will reach 2.8% by the end of 2025, while the Personal Consumption Expenditures (PCE) inflation rate—the Federal Reserve’s preferred gauge—is expected to settle at 2.6%.
