Inflation peaked in May as energy prices fell in June, Kalshi traders think
In light of the recent decrease in oil and gas prices following the easing of tensions between the U.S. and Iran, market traders are now predicting that inflation may have reached its peak. Speculators on the prediction market platform Kalshi are giving only a 28% chance that headline inflation will exceed 4.2% this year, which was the annual rate of increase in the Consumer Price Index in May.
The next CPI report, which will measure inflation in June, is scheduled to be released by the Bureau of Labor Statistics on July 14. Traders on Kalshi are placing bets on whether the CPI will deliver a reading above various percentages in 2026, with contracts being resolved based on the CPI data released each month by the BLS.
The recent decline in inflation expectations can be attributed to the drop in energy prices, which have been a major driver of inflation. Following the U.S.-Iran conflict and the subsequent closure of the Strait of Hormuz, gas and oil prices surged but have since started to retreat after the partial reopening of the waterway. National gasoline prices are currently at $3.84, down from over $4.50 at their peak, reflecting lower U.S. crude oil prices that have fallen below $70 per barrel for the first time since the conflict began.
In May, energy prices accounted for 60% of the CPI’s month-over-month increase. With gas prices on the decline, traders on Kalshi are anticipating that the CPI for June will show prices dropping by 0.2% compared to May, aligning with consensus estimates on Wall Street.
As the inflation outlook continues to evolve, it will be interesting to see how the CPI data for June shapes up and whether the trend of declining energy prices will have a lasting impact on inflation moving forward. Stay tuned for the latest updates on inflation and market trends.
