Goldman Sachs expect Trump’s tariffs to lift inflation despite easing pressures elsewhere

Goldman Sachs expects tariffs to push up goods prices and overall inflation in the coming months, with core inflation likely to rise even as pressures in labour, housing, and autos moderate.

• In Wednesday’s May CPI report, the bank forecasts a modest tariff-related impact, nudging core inflation up 0.05 percentage points to 0.25% month-on-month.
• Looking ahead, core inflation could climb to 3.5% by year-end, up from 2.8% in April.
• Most of the near-term inflation is expected to come from goods rather than services, with hotel and airfare prices projected to remain flat.

Earlier previews here:

• US CPI data due Wednesday, core expected just under 3% y/y
• BofA and Morgan Stanley expectations for the May US CPI report on Wednesday

Data due at 0830 US Eastern time:

This article was written by Eamonn Sheridan at www.forexlive.com.