Goldman Sachs Warns of Inflation Surge Amid Trade Tensions

According to PANews, Goldman Sachs has issued a warning that U.S. President Donald Trump's global trade war could undermine significant progress made in combating inflation. The Wall Street bank informed clients in a report on Wednesday that a harmful combination of high tariffs and a weakening dollar is expected to cause key inflation indicators to surge in the coming months. Goldman Sachs now anticipates that the annual rate of core inflation, excluding food and energy, will accelerate from 2.6% in March to 3.8% by December. This projection is based on the Federal Reserve's preferred PCE price index. The bank believes that the rise in prices will be much more pronounced than the Federal Reserve's March forecast, which did not account for the largest tariffs announced by the U.S. at the time. The Federal Reserve had projected a core PCE inflation rate of 2.8% for December. Furthermore, Goldman Sachs expects the annual rate of core goods inflation to soar from 0.4% in March to 6.3% by December. By the end of the year, significant price increases are anticipated in sectors such as used cars (+8.3%), household appliances (+7.8%), video/audio/computers (+7.7%), jewelry/watches (+5.9%), and pharmaceuticals/medical (+7.8%).