Goldman Sachs Warning: US Inflation Rate Could Reach Nearly 4% Before Christmas

BlockBeats News, May 8th: Goldman Sachs warned that Trump's global trade war could undo much of the progress made in the battle against inflation. In a report to clients on Wednesday, Goldman Sachs said that a harmful combination of high tariffs and a weakened US dollar is expected to cause key inflation indicators to soar in the coming months. Core inflation, excluding food and energy, is projected to accelerate from 2.6% in March to 3.8% by December, based on the Fed's preferred PCE price index.

Goldman Sachs believes that the upward pressure on prices will be much stronger than the Fed's forecast in March, when the US had not yet announced its largest tariffs. The Fed projected a 2.8% core PCE inflation rate in December. Worse still, Goldman Sachs expects the core goods inflation rate to surge from 0.4% in March to 6.3% by December. By December, prices for used cars (+8.3%), household appliances (+7.8%), video/audio/computer equipment (+7.7%), jewelry/watches (+5.9%), and pharmaceuticals/medical care (+7.8%) are expected to rise sharply. (FX678)