Airlines are tipped to bump ticket prices by 5 PERCENT as Goldman forecasts inflation uptick for December

Airlines are expected to have increased ticket prices by as much as 5 percent in December, amid predictions of a rise in headline inflation.

Analysts at Goldman Sachs have warned that the aviation team has seen a “meaningful increase” in real-time price measures ahead of the latest inflation figures, due on Thursday.

The investment banking group said it also expects a three basis point contribution to the “core” elements of the consumer price index, such as food and fuel. Yahoo Finance reports.

“Going forward, we see further disinflation in the pipeline in 2024 due to a rebalancing in the auto, home rental and labor markets, although we expect some offset from a slowed acceleration in healthcare,” said Goldman economists Manuel Abecasis and Spencer Hill.

“We forecast annualized core CPI inflation of 2.9 percent and core (personal consumer spending) inflation of 2.2 percent in December 2024.”

Inflation has been under scrutiny since it jumped dramatically under President Joe Biden’s administration. The president has pushed to lower inflation rates, and an uptick could spell doom in the polls.

Predictions of skyrocketing airfare inflation come just days after a panel blew out of a Boeing jet during an Alaska Airlines flight at 16,000 feet over Oregon

Headline CPI inflation is expected to rise to 3.2 percent in December, up from 3.1 percent in November.

The flight forecast comes just days after a panel on an Alaska Airlines flight blew up at 16,000 feet over Oregon.

Headline CPI inflation is expected to rise to 3.2 percent in December, up from 3.1 percent in November. Axios.

But when volatile aspects of the CPI are removed, such as the food and energy categories, economists expect “core” inflation to have fallen to 3.8 percent annually, from 4.0 percent the month before.

On a monthly basis, economists expect prices to have risen by 0.2 percent last month.

The forecasts fuel hopes that the US is in for a soft landing rather than a recession, as many economists had feared after the Federal Reserve began an aggressive interest rate campaign in March 2022 to try to combat skyrocketing inflation.

The decision to implement cuts could be reinforced by relatively mild price increases.

Among those predicting that inflation will slowly decline is Bank of America.

“2023 defied almost everyone’s expectations: recessions that never happened, rate cuts that didn’t materialize,” said Candace Browning, head of BofA Global Research. “We expect that 2024 will be the year in which central banks can successfully organize a soft landing.”

The bank predicts slightly higher inflation of 3.9 percent, but this still leaves room for the Federal Reserve to cut interest rates in March, according to the team.

The Fed began its aggressive rate hike campaign in March 2022 in an effort to combat rising inflation (photo by Fed Chairman Jerome Powell)

Bank of America Global Research expects the US Federal Reserve to make four interest rate cuts next year, starting in March

However, JPMorgan Chase CEO Jamie Dimon warned that the possibility of a recession is still high, claiming that Americans should prepare for a return to the 1970s – an era marked by rampant inflation, high unemployment and a series of energy crises in the U.S.

When asked by Fox Business Network’s Maria Bartiromo whether households can expect interest rates to fall three times this year, he said: “I’m a skeptic. I think because of budget expenditure and other factors.

“I look at a lot of things – forget the economic models – the $2 trillion budget deficit, the infrastructure and IRA bill, the green economy, the remilitarization of the world, the trade restructuring are all inflationary.

“That looks more like the 1970s to me.”

His comments are in line with Deutsche Bank’s predictions. In October, the German company said rising geopolitical tensions and rising energy prices had created a “striking number of parallels” between the 1970s and 20s.

The latest inflation data will be released Thursday at 8:30 a.m. EST.