Goldman Sachs analysts expect U.S. core consumer price index inflation to come in slightly above expectations for January on support from housing and automobile prices.
GS analysts also expect an escalation in trade tariffs to offset disinflation in the coming months.
The investment bank said it expects a 0.34% month-on-month increase in January core CPI, against consensus of 0.3%. This is expected to translate into a year-on-year core CPI rate of 3.19% against consensus of 3.1%.
Headline CPI is also expected to increase 0.36% m-o-m, more than consensus of 0.3%, on higher food and energy prices. The government reading on CPI is due on Wednesday.
While U.S. CPI inflation eased through 2024 amid pressure from high interest rates, it turned largely sticky towards the end of the year, spurring a more hawkish stance from the Federal Reserve.
GS warned that “an escalation in tariff policy” could offset disinflation from a rebalancing in the auto, housing rental, and labor markets in the coming months. This warning came as President Donald Trump imposed 25% tariffs on all imports of steel and aluminum, after slapping 10% tariffs on China last week.
Trump also flagged the potential for more tariffs, which analysts fear could underpin inflation, given that his trade tariffs will be borne by U.S. importers.
GS forecast core CPI of 2.8% by end-2025, along with PCE inflation- which is the Fed’s preferred inflation gauge- at 2.6%.
