According to analysts at UBS, inflation in the United States is expected to continue its upward trajectory in the first half of 2026. The primary driver of rising prices remains tariffs, which have already contributed to a noticeable increase in inflation metrics. The bank reports that overall inflation has risen by 46 to 70 basis points from post-pandemic lows, while core inflation has increased by 24 to 30 basis points. Economists foresee an additional rise of 30 to 40 basis points, reaching a peak in the second quarter of 2026.

UBS has adjusted its long-term forecast due to the reduced scale of implemented tariffs and the slower pass-through of their costs to consumers, particularly in the automotive sector. However, potential tariff increases still pose a significant risk. Analysts advise caution regarding November’s consumer price data, citing distortions caused by the government shutdown.

The bank predicts that the core personal consumption expenditures (PCE) price index will peak at around 3.2% in the second quarter of 2026 and will remain above the Federal Reserve’s target of 2% well into 2027. UBS’s forecasts for core PCE are 3.0% in 2025, 2.9% in 2026, and 2.4% in 2027, all exceeding consensus market predictions.