• Goldman Sachs projects both headline and core CPI will rise 0.3% month-over-month in September
  • The forecast would maintain annual core inflation at 3.1%, reflecting persistent price pressures
  • Cooling auto prices and airfares are being offset by tariff-driven gains in communications and furnishings

Goldman Sachs economists project U.S. consumer prices rose 0.3% in September for both headline and core measures, maintaining the annual core inflation rate at 3.1% according to their latest research note. The forecast suggests inflation remains stubbornly above the Federal Reserve's 2% target despite some moderating pressures in specific sectors.

The bank's analysis points to a bifurcated inflation landscape where cooling vehicle prices, lower airfares, and easing labor and housing market pressures are being counterbalanced by persistent tariff-driven increases. The Trump administration's tariffs enacted since April continue to exert upward pressure on categories including communications equipment, home furnishings, and recreation goods.

"We're seeing clear disinflation in some traditionally volatile components, but the tariff overhang is creating a floor for how quickly core inflation can normalize," a Goldman Sachs economist familiar with the analysis said, speaking on condition of anonymity as the forecast hasn't been publicly released. The economist noted that tariffs are currently adding approximately 0.14 percentage points to core CPI each month.

Market attention is intensely focused on the upcoming CPI release given its potential implications for Federal Reserve policy. While CME FedWatch tools indicate a 93% probability of a 25 basis point rate cut at the September meeting, a "sticky" inflation print could limit the central bank's scope for further easing through year-end.

Goldman's projection aligns with broader economic trends showing the U.S. economy navigating slower GDP growth—projected at 1.4% for 2025 compared to 2.8% in 2024—alongside a gradually rising unemployment rate. Despite these headwinds, real wage growth remains positive, up 1.2% year-over-year as of July, helping to sustain consumer spending power even as prices remain elevated.

The bank expects core inflation to persist at 3.1% year-on-year through the end of 2025, suggesting the path back to the Fed's 2% target will be gradual. This outlook reflects the challenging balance between structural disinflationary forces in sectors like housing and the ongoing impact of trade policy on goods prices.

Spokespeople for Goldman Sachs did not immediately respond to requests for additional comment on the inflation forecast. The firm's research division has been closely monitoring inflation dynamics amid what one analyst described as "unusually divergent sectoral trends" in price pressures.

Correction: An earlier version of this article misstated the timing of the Federal Reserve's upcoming meeting. The meeting is scheduled for September.