Goldman Sachs economist Megan Peters said that US core inflation looks high only because of two temporary, US‑specific factors: tariffs and a mismeasured boost from AI‑driven memory price increases. According to the bank’s decomposition, core inflation is running about three percentage points above its pre‑pandemic trend in PCE terms, with tariffs contributing an estimated 2.4 percentage points to year‑over‑year core PCE goods inflation and AI‑related memory prices adding roughly one percentage point through the "software and accessories" category.
The analysis also noted that lower goods prices from China are reducing inflation elsewhere: goods prices are down 0.8 % on average in non‑US developed markets and 0.6 % in major emerging markets. After adjusting for differences in how countries measure medical and financial services, US non‑shelter services inflation is actually lower than in other large developed markets, and unit‑cost labor growth is more contained in the United States than abroad.
Rent or shelter inflation has fully normalized in both the US and emerging markets but remains elevated in other developed markets, particularly those with limited pullbacks in immigration. Peters added that core inflation is close to target in most countries, but the US appears as an outlier only because of the temporary goods‑side pressures.
Looking forward, Goldman expects the tariff impact to fade in the second half of next year, while the AI‑related memory price distortion is projected to ease in 2027.
