Goldman Sachs predicts that growth in the US core personal consumption expenditures (PCE) index will nearly halve by the end of 2022, as the US bank expects commodity price increases and supply-chain constraints to ease after causing near-term price spikes.

Goldman Sachs economists predict that the core PCE index, the Federal Reserve's preferred inflation measure, will fall to 2.3% by the end of next year, down from 4.4% at the end of 2021, as demand for goods moderates and the peak stay-at-home and stimulus effects fade.

While the current inflation overshoot is "startling," they attribute it entirely to a surge in durable goods prices, which is being driven by severe and persistent supply and demand imbalances. "The current inflation surge will get worse this winter before it gets better," Goldman's chief economist Jan Hatzius said in a note.

"We do expect persistent inflationary pressure from faster growth of wages and rents, but only enough to keep inflation moderately above 2%, in line with the Fed's goal under its new framework."

The PCE index rose 0.2% in September, following a 0.3% increase in August, excluding volatile food and energy components. For the fourth month in a row, the so-called core PCE price index increased 3.6% in the year to September.

Goldman Sachs posts record results as profits jump | Fox Business