Goldman Sachs' economics team expects June's core CPI - which excludes food and energy - to increase by 0.17% from the prior month, slightly under the consensus forecast, according to the firm's published projection. At the same time, Goldman foresees headline CPI declining by 0.11% month-over-month. The bank emphasized that Tuesday's report will be an important data point for Federal Reserve policy deliberations.
Federal Reserve Governor Christopher Waller linked the prospect of further near-term tightening to an unexpectedly strong core inflation print in remarks on Monday. The central bank's attention, Goldman notes, has shifted toward demand-side pressures tied to the artificial intelligence boom and the persistence of inflationary effects tied to the energy supply shock, a recalibration driven in part by recent employment figures that point to a stabilizing labor market.
Goldman Sachs says several sector-level dynamics underlie its softer core CPI forecast. Those include ongoing disinflation in rent and owners' equivalent rent, a decline in hotel price inflation as the World Cup effect wanes, easing jet fuel inflation associated with lower energy costs, and weak price momentum in new and used autos. The bank's projection is consistent with its view for a 0.24% increase in the core personal consumption expenditures price index.
The report highlights an idiosyncratic component worth watching: computer software and accessories. That category rose 14.5% year-over-year through May. While it represents only a 0.03% weight in the CPI basket, it carries a more meaningful 1.1% weight in PCE, which helps account for part of the divergence between current PCE and CPI readings.
Goldman notes that if the 17-basis-point core CPI forecast is realized, it would extend a pattern of CPI cores undershooting Bloomberg consensus estimates over the past year. Such undershoots, the firm argues, could prompt a rollback in the market's near-term rate-hike expectations, align with Goldman's call for the Federal Open Market Committee to hold policy rates at its July meeting, and exert modest downward pressure on the U.S. dollar.
Equity sentiment shown in market pricing reflected modest weakness in the large-cap ETF SPY, which was indicated at 749.17, down 5.78 points or 0.77% on a closed quote, with a nearby pre-market print at 748.92, a 0.03% decline.
Methodology note: All projections, component observations and market links above reflect the information provided in Goldman Sachs' forecast and related market quotes; the firm presented these points as the rationale for its slightly softer core CPI outlook and their potential implications for policy and currency pricing.