Prediction Markets Bet on Lower US Inflation Ahead of Official Data Release
Washington, Tuesday, 11 August 2026.
Prediction market traders see just an 18% chance that July’s month-over-month inflation exceeds 0.1%, signaling price growth may come in softer than economists expect ahead of Wednesday’s official release.
Market Expectations vs. Consensus
Prediction market traders expect July’s consumer price index will be relatively tame, coming in below the Dow Jones consensus forecast [1]. Monday’s odds on the prediction market platform Kalshi show traders see a less than 55% likelihood that July’s CPI reading comes in above 3.3% on a year-over-year basis [1]. They see a 15% chance that CPI comes in hotter than 3.4% [1]. In comparison, economists polled by Dow Jones see the headline inflation number coming in at 3.4% [1]. On the year-over-year side, traders are pricing in roughly 52-53% odds that annual CPI topped 3.3% [2]. The probability of it clearing 3.4% drops to just 16% [2].
Historical Data and Monthly Trends
The annual inflation rate in June came at 3.5% which was less than the Dow Jones consensus estimate of 3.8% [1]. June’s CPI also fell 0.4% on a month-over-month basis, which was the biggest decline in more than six years thanks to a temporary drop in energy prices [1]. For July, economists expect CPI to increase 0.1% after dropping 0.4% in June, according to FactSet consensus estimates [6]. Kalshi prediction market shows 68% odds July CPI rose above 0.0% but only 18% chance it exceeded 0.1%, signaling subdued inflation ahead of the report [2]. About a 40% chance of a goose egg or negative month-over-month reading is also priced in by some market participants [5].
Implications for Federal Reserve Policy
The CPI measures the average change over time in consumer prices for goods and services [1]. It’s a significant report for the Federal Reserve, which will consider the data when policymakers decide how to proceed on rates at their next meeting in September [1]. Kalshi traders are pricing July CPI at 3.3% ahead of Wednesday’s release, while Treasury yields rise and September Fed hike odds have fallen [3]. The odds for a September Fed hike have fallen to 46% from 67% a week ago after weak payrolls [3]. This represents a decrease in probability of 21 percentage points [3]. A hotter CPI could revive hike bets and pressure bonds [3].
Broader Economic Context
Participants in the Kalshi forecasting market expect the U.S. consumer price index for July to come in below economists’ consensus forecast, according to CNBC [4]. The U.S. Bureau of Labor Statistics is set to release the report on Wednesday morning [4]. Some of Kalshi’s contracts relate to core inflation, which excludes food and energy prices [4]. Traders assigned a 47% probability that the annual rate would exceed 2.4%, and only an 11% probability that it would be higher than 2.5% [4]. The Dow Jones consensus for core inflation is 2.5% in July, down from 2.6% in June [4]. The results of Kalshi’s inflation contracts are subject to verification by data from the U.S. Bureau of Labor Statistics [4].