Mid-Year Inflation Outlook: Oil and AI vs. Wages and Rent

Goldman Sachs forecasts 2026 year-end Core PCE inflation at 3.2%, citing transitory pressures from energy, AI-related memory prices, and equity market performance. These factors are expected to fade by 2027, allowing inflation to return to 2.2%.

Key Takeaways

• 1.Core PCE inflation is reaccelerating due to energy price passthrough, AI-related memory price pressures, and equity-linked financial services inflation.
• 2.The US-Iran agreement is expected to lower energy price risks, reducing core PCE inflation pressure by 0.2pp and 0.05pp respectively.
• 3.AI-related memory price spikes are driving inflation in software and accessories, with an estimated peak impact on core PCE of 0.6pp in 2026H2.

Table of Contents

• Mid-Year Inflation Outlook: Oil and AI vs. Wages and Rent
• Relief From the US-Iran Agreement
• The Inflationary Impulse From AI: Larger for PCE Than for CPI
• Disinflation From Rent and Wages
• Broader Inflation Risk
• The Inflation Outlook
• Appendix
• The US Economic and Financial Outlook

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