Investing.com -- Core PCE inflation is set to remain elevated through the end of 2026 before cooling sharply in 2027 as artificial intelligence-related price pressures and energy passthrough effects dissipate, according to Goldman Sachs.

Analyst Manuel Abecasis forecasts year-over-year core PCE inflation of 3.2% in December 2026, followed by a slowdown to 2.2% by December 2027 "as the AI and energy effects wane."

Core CPI, which Goldman said is "less affected by AI measurement issues and stock market swings," is projected to reach 2.6% year-over-year by December 2026 and 2.2% by December 2027.

The U.S.-Iran agreement has provided near-term relief, according to the bank. Goldman's commodity strategists lowered their oil forecasts to $80 per barrel on average in Q4 2026 and $75 in 2027, implying approximately 0.2 percentage points and 0.05 percentage points less upward pressure on headline and core PCE inflation this year than previously assumed.

Goldman's preliminary June headline CPI and PCE estimates stand at -0.13% and 0.07%, respectively.

The firm noted that AI-related pressure on memory prices has been an underappreciated driver of inflation, pushing up computer software and accessories inflation through measurement distortions that amplify their impact on core PCE.

Goldman expects monthly software and accessories inflation to slow from approximately 4–5% in recent months to around 0.6% by Q4 2026.

On underlying inflation, Abecasis maintained a favorable outlook, expecting rent growth to slow below its pre-pandemic pace and nominal wage growth to put downward pressure on core nonhousing services inflation.

The bank believes risks remain "skewed to the upside on net, particularly if the situation in the Middle East deteriorates."