Goldman Sachs shares its outlook on the upcoming US Consumer Price Index (CPI) data for July, with expectations slightly lower than the general consensus. Here are the key details:
July Core CPI Prediction: Goldman expects a 0.15% increase in core CPI for July, translating to a year-over-year rate of 4.66%. This is below the consensus of a 0.2% increase and a 4.8% year-over-year rate.
July Headline CPI Forecast: The bank anticipates a 0.16% rise in headline CPI, corresponding to a 3.17% year-over-year rate. The general consensus stands at a 0.2% increase with a 3.3% year-over-year rate.
Monthly Core CPI Inflation: Looking ahead, Goldman sees monthly core CPI inflation remaining within the 0.2-0.3% range over the next several months. This outlook reflects an expected moderation in shelter inflation, decreased used car prices, and slower non-housing services inflation as labor demand continues to ease.
Year-End Forecasts: Goldman projects core CPI inflation to be at 3.8% in December 2023 and 3.0% in December 2024.
- Goldman's expectations for July core and headline CPI are below market consensus.
- The bank anticipates continued moderation in shelter inflation, lower used car prices, and slower non-housing services inflation.
- The longer-term forecast points to a decline in core CPI inflation by the end of 2024.
Conclusion: Goldman's forecast for the US CPI print on Thursday is notably lower than the market consensus, reflecting a nuanced view of inflation drivers. The bank's projections take into account various factors influencing inflation, including shelter, used car prices, and non-housing services. The outlook also indicates a declining trend in core CPI inflation over the next couple of years. This analysis provides a counterpoint to more widespread expectations and underscores the complexity of inflation dynamics in the current economic environment.