U.S. consumer prices rose 0.6% in September, lifting annual inflation to 3.7% from 3.4% in August, above economists’ forecast of 3.6%, as quoted on CNBC. Core CPI increased 0.3% monthly and 2.6% year over year, also exceeding forecasts.

Surging energy costs drove inflation higher, with gasoline prices jumping 9.1% and accounting for about half of the monthly CPI increase. Shelter costs rose 0.4%, while used vehicle prices gained 0.7%.

Persistent inflation, fueled by energy costs and potentially AI-related demand, continues to keep price pressures well above the Fed’s 2% target.

Is AI-Led Inflation Peaking?

In a surprising forecast, Goldman Sachs economists Rindels and David Mericle said AI-related inflationary pressures are significant but moderate and may be close to peaking, as reported by Goldman Sachs.

Goldman Sachs estimates that AI-related price pressures are currently adding about 45 basis points to core personal consumption expenditures (PCE) inflation. About half of this impact reflects genuine inflationary pressure, while the remainder stems from measurement issues.

Economists expect the impact to peak at 50 basis points by the end of 2026, before falling to just 10 basis points by the end of 2027. The expected slowdown largely reflects the prospect of more moderate price increases for computer memory and other computing equipment.

Will Inflation Cool Down in 2027?

The outlook comes at a challenging time for the Fed, mainly due to rising energy costs. In September 2026, the Fed raised interest rates for the first time since July 2023, to fight surging inflation.

Another rate hike could still be on the table this year. New York Fed President John Williams reiterated his view that another increase might be appropriate, according to Bloomberg, as mentioned on the same Yahoo Finance source.

However, policymakers are not ready to declare victory over inflation, even if AI-related price pressures begin to moderate. So, further rate hikes in 2027 may be possible, though in a tempered manner, if inflation can be controlled.

What Lies Ahead?

Goldman's forecast offers a potentially encouraging development: AI-related inflationary pressures may not continue rising indefinitely. However, energy prices remain a concern. Meanwhile, President Donald Trump said the United States will not attack Iran before the Nov. 3 midterm elections.

Iran is reportedly strengthening sensitive sites, including nuclear facilities, as it prepares for possible renewed U.S. attacks, The Wall Street Journal reported, as quoted on CNBC. So, the dark clouds over energy-led inflation are not going away yet.

Growth ETFs to Bet On?

With Goldman Sachs’ forecast offering some hope on the inflation front, we expect growth stocks to stay strong, going into 2027. Growth stocks normally underperform in a higher-rate environment.

However, if AI-led inflation falls, only an energy-driven rise needs to be tackled. And if we get positive news on the Iran war front, soaring AI demand should keep the rally going for growth ETFs.

Against this backdrop, investors can bet on growth ETFs with a relatively lower P/E and that have gained over the past month, indicating decent momentum.Note that the tech ETF State Street Technology Select Sector SPDR ETF (XLK Quick QuoteXLK - Free Report) has a P/E ratio of 31.76X, while it is up about 4.6% over the past month.

Below we highlight a few ETFs that have a lower P/E than XLK.

ETF Picks

Invesco QQQ Trust, Series 1 (QQQ Quick QuoteQQQ - Free Report) –P/E: 28.72X; Up 3.6% past month (as of Oct. 14, 2026)

Vanguard Morningstar Growth ETF (VUG Quick QuoteVUG - Free Report) –P/E: 28.24X; Up 3.3% past month

Vanguard S&P 500 Growth ETF (VOOG Quick QuoteVOOG - Free Report) – P/E: 27.08X; Up 3.6% past month

State Street SPDR Portfolio S&P 500 Growth ETF (SPYG Quick QuoteSPYG - Free Report) – P/E: 24.96X; Up 3.2% past month

Capital Group Growth ETF (CGGR Quick QuoteCGGR - Free Report) – P/E: 27.93X; Up 2.0% past month