Mid-Year Inflation Outlook: Oil and AI vs. Wages and Rent

Research evidence excerpt

Mid-Year Inflation Outlook: Oil and AI vs. Wages and Rent

Economics Research

22 June 2026 | 10:03PM EDT

US ECONOMICS ANALYST

n Core PCE inflation has reaccelerated this year, partly reflecting a combination of Manuel Abecasis

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energy price passthrough, AI-related price pressures amplified by measurement manuel.abecasis@gs.com

Goldman Sachs & Co. LLC

issues, and financial services inflation driven by higher equity prices. In this

week’s Analyst, we take stock of the inflation outlook.

n The US-Iran agreement has reduced upside risks to inflation from higher energy

prices. Our commodity strategists lowered their oil forecasts to $80 on average in

2026Q4 and $75 in 2027 (vs. $90 and $80 previously), which implies about 0.2pp

and 0.05pp less upward pressure on headline and core PCE inflation this year

than our previous assumptions. In the near term, lower gasoline prices will

translate into soft headline inflation prints in June, and our preliminary headline

CPI and PCE estimates for June stand at -0.13% and 0.07%, respectively. The

prices of several other non-oil Gulf exports have also declined meaningfully in

recent days. We now estimate that commodity prices will deliver a roughly 0.4pp

boost to year-over-year core PCE inflation through 2026Q4.

n AI-related pressure on memory prices has pushed up computer software and

accessories inflation, generating an especially large boost to core PCE because of

measurement distortions. We expect monthly software and accessories inflation

to slow from about 4-5% in recent months to about 0.6% by 2026Q4, reflecting

a sharp slowdown in memory price inflation in recent months. We also expect

higher memory prices to increase phone and computer inflation throughout