Goldman says carbon net zero shift likely to boost inflation

The firm's analysts see the biggest inflation impact in the U.S. and China.

The global push to achieve net-zero carbon emissions will likely result in a meaningful boost to inflation, according to analysts at Goldman Sachs Group Inc.   

Based on the assumption that carbon taxes would rise to $100 a ton by 2030, the analysts led by Jan Hatzius calculated the likely rise in prices in four major economies — the U.S., China, Germany and Canada.

Their analysis suggests the inflation impact will likely be biggest in the U.S. and China, with an annual boost to U.S. headline inflation of 0.25 percentage point for the first three years. The impact on China is estimated at 0.3 percentage points.

Canada and Germany are forecast to have smaller jumps in inflation because both countries have already introduced a carbon tax. 

Surging commodity prices, supply chain disruptions and rising global demand drove up inflation last year, prompting central bankers to shift their policy stance toward tightening. The Goldman report suggests the path toward greening the economy may be another reason for policy makers to be wary of rising prices.