Goldman Sachs: Inflation to get worse in coming months

FILE - In this Dec. 13, 2016, file photo, the logo for Goldman Sachs appears above a trading post on the floor of the New York Stock Exchange. Goldman Sachs' profits jumped 60% in the third quarter, Friday, Oct. 15, 2021, as the deal-making bonanza that dominated financial markets this summer brought in hundreds of millions of dollars in fee revenue for the investment bank. (AP Photo/Richard Drew, File)

FILE – In this Dec. 13, 2016, file photo, the logo for Goldman Sachs appears above a trading post on the floor of the New York Stock Exchange. (AP Photo/Richard Drew, File)

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UPDATED 10:56 AM PT – Thursday, November 18, 2021

Investment bank Goldman Sachs expects U.S. inflation to climb even higher in the coming months.

In a new report, Goldman Sachs’ economists found U.S. core personal consumption price index will rise to 4.3 percent by the end of this year. This directly points to a rise in gas prices and consumer goods, pushing the broader inflation measure up as well.

Overall, U.S. inflation is expected to hit 7 percent in December, which is up from 6.2 percent last month. Economists also said lack of improvements in the labor market and the lingering supply chain crisis will fuel inflation for the foreseeable future.

“The current inflation surge will get worse this winter before it gets better. We do expect persistent inflationary pressure from faster growth of wages and rents, but only enough to keep inflation moderately above 2 percent, in line with the Fed’s goal under its new framework,” said Jan Hatzuis, chief economist at Goldman Sachs.

“Labor supply issues are an important driver here, the other important driver is what we’re seeing just in terms of goods demand and goods inflation, which I think is going to spill more into 2022 as Chair Powell discussed in the press conference on Wednesday,” stated Hatzuis.

Goldman Sachs is expecting inflation to ease by mid-2022, although it will remain above its 10 year average until the end of next year.

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