Everything has gotten pricier this year, and Goldman Sachs believes that the next Consumer Price Index inflation report released on Wednesday, October 14, will reflect an economy under even greater strain.
The 157-year-old investment bank has long been considered one of the savviest watchers of the economy and markets. It estimates that CPI increased 3.7% year-over-year in September, slightly above Wall Street’s consensus of 3.6%, and up from 3.4% in August.
“We expect a 0.59% increase in headline CPI, reflecting higher food (+0.2%) and energy (+5.0%) prices, the latter driven by a further increase in retail gasoline prices. This corresponds to a year-over-year rate of +3.70% (vs. +3.6% consensus and +3.40% in August),” wrote Goldman Sachs in a research note shared with me.
Americans caught in a price spiral driven by war in the Middle East
The biggest driver of headline inflation is energy, and the spike in energy prices is directly tied to the negative impact on oil supply out of the Middle East since the conflict between the U.S., Israel, and Iran escalated earlier this year.
A major culprit in the oil supply disruption is the limited tanker traffic through the Strait of Hormuz, which has historically carried 20% of the world’s oil supply.
The bottlenecked Strait has caused Brent Oil Prices to surge 75% this year to $105 per barrel. West Texas Crude oil has similarly leaped to about $94 per barrel from beneath $60 at the beginning of 2026.
Correspondingly, the prices of gasoline and diesel have surged, pressuring wallets and crimping budgets. Because oil is used for energy to produce goods, and shipping costs have increased, knock-on effects on prices are being felt throughout the economy.
Core CPI is doing better, but still rising
Economists like to track CPI excluding volatile oil and food prices as a smoother gauge of price pressure. Goldman Sachs expects that measure, known as Core CPI, to have increased last month as well.
“We expect a 0.24% increase in September core CPI (vs. +0.2% consensus), corresponding to a year-over-year rate of +2.46%,” wrote Goldman Sachs’ economists.
Higher prices for autos and airfares are likely to capture attention. Goldman Sachs predicts a 0.5% increase in used car purchases from August, while airfares are expected to jump 3% month over month as airlines race to offset soaring jet fuel costs.
The increase in airfares would be the highest since January 2026.
Goldman Sachs
Goldman Sachs sees more inflation through the end of the year
The rise in prices isn’t likely to be over, given that Goldman Sachs’ forecast for the rest of the year shows CPI will increase in each of the next three months:
- October: +0.2%
- November: +0.1%
- December: +0.1%
“Risks are tilted to the upside if disruptions to oil markets and associated oil price increases prove more persistent than expected,” wrote the economists.
That’s not great news for consumers heading into the all-important holiday shopping season, especially given consumer sentiment has soured.
“On a six-month moving average basis, confidence across all age groups and nearly all income groups trended downward,” according to the Conference Board’s Consumer Confidence Index.
“Consumers’ average and median 12-month inflation expectations rose 0.3 ppts in September to 6.1% and 5.1% respectively. The share of consumers anticipating higher interest rates over the next 12 months jumped by 5.2 ppts to 68.4%,” noted the Conference Board.
