Scan: Will inflation reach more than 5% in 2026?

date	predicted	market price	confidence
2026-08-23	5%	8%	78%
2026-08-16	6%	8%	76%

1. Planner Fable 5 · Fermi decomposition + tool plan

Tools chosen: polymarket_direct fred kalshi_related polymarket_related claude_news code_execution

Sub-questions (Fermi decomposition)

What is the current 12-month headline CPI rate and its month-over-month trend in the most recent BLS reports?
What do professional forecasters (Fed SEP, Cleveland Fed nowcast, SPF, Wall Street banks) project for CPI inflation through 2026?
What are market-implied inflation expectations (breakevens, inflation swaps) for the 2026 horizon, and are they anywhere near 5%?
Are there identifiable shocks (new tariffs, energy price spikes, fiscal stimulus, supply chain disruptions) that could plausibly push 12-month CPI above 5% during 2026?
Historically, how often has 12-month CPI risen by ~2 percentage points or more within a 12-18 month window from a starting point around 3%?
What probabilities do related Kalshi and Polymarket inflation markets assign to various 2025-2026 CPI thresholds?

Planner reasoning

This market resolves YES if any monthly BLS CPI report in 2026 shows 12-month headline CPI above 5.0%. Current inflation is around 3%, so the key questions are the current trajectory, tariff/policy shocks that could push inflation up sharply, and what forecasters and market-implied measures expect for 2026. The Polymarket price is the primary anchor; FRED data and cross-market checks on Kalshi inflation markets provide triangulation.

2. Research Parallel tool calls

tool	status	time	items	summary
polymarket_direct	OK	0.4s	1	## This Market's Polymarket Data Will inflation reach more than 5% in 2026? - Current price (probability): 7.00% - 7-day price change: +0.00% - 30-day price change: -6.50% - Total volume: $313,820 (USD notional) - Price range: 6.00% - 31.00% - Data points: 90 days
fred	OK	5.1s	4	Fetched 4 FRED series (lookback=730d).
kalshi_related	OK	2.9s	2	2 related markets / summaries. keyword 'inflation': ok \| keyword 'CPI': ok
polymarket_related	OK	0.1s	0	Scanned 100 active Polymarket markets, kept 0 matches. keyword 'inflation 2026': 0 markets \| keyword 'CPI': 0 markets
claude_news	OK	19.6s	14	Based on my research: - Latest CPI reading: US headline CPI was 3.40% in July 2026, down from 3.50% in June, easing for a second consecutive month , well below the 5% threshold. (tradingeconomics.com) - 2026 peak so far: Inflation had earlier spiked to 4.2% in May 2026 due to an energy s
code_execution	OK	73.9s	0	## Key Findings Historical base rate (simulated monthly CPI YoY series, 1960–2024, from known annual BLS averages with realistic monthly interpolation/noise): - Out of 207 months where trailing 12-month CPI YoY sat in a "~3%" band (2.5%–3.5%), the frequency of subsequently breaching 5% YoY

3. Evidence Brief Sonnet 5 · 6136 chars

# Current state As of the most recent BLS data (July 2026), 12-month headline CPI stands at 3.4%, down from 3.5% in June and well below the 5% threshold; the 2026 peak so far was 4.2% in May, driven by an Iran-war energy shock, and inflation has since eased for two straight months. Resolution triggers YES if ANY month's 12-month CPI print in 2026 exceeds 5% (not just December) — since the year's peak-to-date (4.2%) already fell short and the trend is now downward with only ~5 months (Aug–Dec 2026) remaining, the bar is functionally about whether a fresh, larger shock hits before year-end. # Timeline of key events - 2026-05: CPI YoY spikes to 4.2%, 2026 peak, attributed to energy shock from Iran conflict (reported, tradingeconomics.com). - 2026-06-17: FOMC (June SEP) raises 2026 headline PCE inflation forecast to 3.6% (core 3.3%), up from March's 2.7% (confirmed, CNBC/Forbes). - 2026-06: CPI YoY eases to 3.5% (reported, tradingeconomics.com). - 2026-07: CPI YoY eases further to 3.4%; core CPI 2.5% (reported, tradingeconomics.com). - 2026 (undated, ongoing): PIIE's Orszag/Posen argue upside risk could push inflation past 4% by year-end, citing tariffs, fiscal deficit, tight labor market (analyst opinion, PIIE). - 2026 (undated): NY Fed survey finds ~75% of tariff-affected firms passing on some cost increases (reported, arete-wa.com); Deloitte assumes tariffs ease toward ~5% average rate and oil averages $85/bbl in 2026, dampening further pressure (forecast). # Event Will 12-month CPI (any month in 2026, per BLS) exceed 5%? # Outcomes to forecast - Yes (>5% in any 2026 month) - No (never exceeds 5% in 2026) # Kalshi market anchor No distinct kalshi_direct output was returned for this ticker; the only direct pricing data available is from polymarket_direct (ticker matches exactly): current YES price 7.0%, flat over 7 days, down 6.5 points over 30 days, off a 90-day high of 31% (low 6%), volume $313,820. Treat 7% as the best available consensus anchor. Related Kalshi CPI markets found (KXUSCPIYEAR series) reference 2034–2036 horizons and are not directly comparable. # Sub-question answers 1. **Current CPI trend** — July 2026 headline CPI YoY = 3.4%, down from 3.5% (June) and 4.2% (May peak); core CPI 2.5% in July, easing two consecutive months (tradingeconomics.com via claude_news). 2. **Forecaster projections** — Fed June 2026 SEP: 3.6% headline PCE, 3.3% core for 2026 (CNBC/Forbes). Morningstar: ~2.7% for 2026. RSM: above 2% target but not near 5%. Most hawkish mainstream view (PIIE, Orszag/Posen): could exceed 4% by year-end 2026 — still under 5%. 3. **Market-implied expectations** — 10yr breakeven (T10YIE) 2.31%, 5yr breakeven 2.31% (Aug 2026, FRED); Michigan 1-yr expected inflation spiked to 3.5% in May 2026 but fell back to 2.39% by August. None approach 5%. 4. **Potential shocks** — Iran-war energy shock already drove the May 2026 4.2% peak; tariff pass-through is real (~75% of affected firms raising prices, NY Fed survey) but Deloitte assumes tariffs ease to ~5% average rate and oil averages $85/bbl in 2026 — a moderating, not escalating, baseline. No new large shock identified for H2 2026. 5. **Historical base rate** — Simulated 1960–2024 data: from a ~3% CPI starting point, probability of breaching 5% within 12 months ≈ 4.5%, within 18 months ≈ 6.6%, within 24 months ≈ 9.6% (code_execution), historically driven by 1970s oil shocks, late-1980s overheating, and 2021–22 pandemic surge. 6. **Cross-market pricing** — Polymarket prices this exact event at 7% (down sharply from a 31% high). No comparable Kalshi 2026-specific CPI threshold market was found. # Key facts (high-confidence, factual) 1. [FRED/tradingeconomics] July 2026 CPI YoY = 3.4%, June = 3.5%, May peak = 4.2%. 2. [CNBC/Forbes] June 2026 FOMC SEP: 2026 headline PCE inflation forecast raised to 3.6%. 3. [FRED] 5yr/10yr breakevens ~2.3% as of late Aug 2026; no market pricing near 5%. 4. [Polymarket] This exact market trades at 7% YES, down from 31% three months ago. 5. [code_execution] Historical base rate of 3%→5%+ CPI jump within 12-18 months ≈ 5-7%. # Cross-market signals - Kalshi related: only long-horizon (2034–2036) CPI markets found; not informative for 2026. - Polymarket: this market (matching ticker) at 7%, declining trend, high historical range (6-31%) suggests market has already de-risked substantially as actual data came in below 5%. - Sportsbook implied: n/a. # Analyst opinions and speculation - PIIE (Orszag/Posen): inflation could "surprise to the upside," potentially exceeding 4% by end-2026 due to tariffs, fiscal deficit, tight labor market, and drifting expectations — the most hawkish credible view found, still short of 5%. - Deloitte/RSM: baseline assumes tariff/oil moderation, keeping inflation elevated but well under 5%. - No analyst or institution surveyed forecasts >5% for 2026. # Directional lean per outcome - **Yes (>5%)**: Supported only by tail-risk shock scenarios (new energy crisis, aggressive tariff escalation) and the fact that a 4.2% spike already occurred once in 2026. Opposed by: actual data already cooling to 3.4%, no forecaster above ~4%, breakevens near 2.3%, only ~5 months remain, Polymarket at 7% and falling. - **No (≤5%)**: Strongly favored — current trajectory, unanimous forecaster consensus, low market-implied expectations, and historical base rates (~5-10%) for such a jump all point to No, especially given the year's peak already passed without breaching 5%. # Gaps / unknowns - No true Kalshi order-book data (kalshi_direct) retrieved for this specific ticker; anchor relies on Polymarket. - August–December 2026 CPI prints not yet available; unclear if any residual tariff/energy pass-through could reaccelerate prints late in the year. - Exact dating of PIIE/NY Fed/Deloitte publications not specified. # Calibration anchors - Polymarket current YES price: 7% (anchor, declining trend). - Historical base rate for 3%→5%+ CPI jump within 12-18 months: ~5-7% (code_execution simulation). - Given actual 2026 peak (4.2%) already passed and current 3.4%/falling, true probability likely below the 7% anchor — perhaps 3-5%.

4. Forecasters Fable 5 + GPT-5.6 Sol · in parallel

claude-fable-5

78% conf

Yes	4%
No	96%

The 2026 peak so far was 4.2% in May (Iran energy shock), and CPI has since cooled to 3.4% by July with only ~5 months of prints remaining. No forecaster surveyed projects above ~4% (PIIE's hawkish scenario), breakevens sit near 2.3%, and the Fed's own upgraded 2026 forecast is 3.6% PCE. Polymarket prices this exact event at 7% and falling from a 31% high; reaching >5% now requires a fresh, larger shock than the one already absorbed. Given the declining trajectory and historical base rate (~5-7% for a 3%→5% jump), I place YES slightly below the market anchor at 4%.

gpt-5.6-sol

76% conf

Yes	6%
No	94%

The best available consensus anchor is Polymarket's 7% YES price, with no directly comparable Kalshi market. July CPI was 3.4%, down from May's 4.2% peak, so a breach now requires a fresh shock during the remaining five months. Mainstream forecasts, roughly 2.3% breakevens, and even the hawkish PIIE scenario remain below 5%, while historical breach rates are only about 5-7% over a longer 12-18 month window. I therefore move modestly below the 7% anchor, while retaining tail risk for renewed energy disruption or unexpectedly strong tariff pass-through.

5. Devil's Advocate Sonnet 5 · red-team critique

Both forecasts converge tightly (4-5.5%) near the Polymarket anchor without independently stress-testing whether 7% itself might already be stale or mispriced given thin volume ($313,820) and a 90-day range of 6-31%—neither forecaster questions why Polymarket hasn't fully collapsed to ~2-3% if the "No" case is truly this strong, which could indicate residual uncertainty the forecasters are underweighting.

Neither forecaster explicitly addresses the mechanical asymmetry that YES only requires ONE month >5% out of five remaining prints (Aug-Dec), meaning even a temporary one-month spike (e.g., a base-effect quirk or short-lived tariff pass-through shock) resolves YES regardless of subsequent reversion — this "any single month" trigger deserves more explicit treatment than the aggregate trend framing both use.

Both cite the historical base rate (~5-7% for a 3%→5% jump within 12-18 months) as roughly consistent with their final answer, but the brief's base rate is for a *starting point of ~3%*, whereas the actual starting point is 3.4% already down from a 4.2% peak — using the higher recent peak as anchor (not the current 3.4%) might argue for a somewhat different (likely lower, given already-observed cooling) base rate than blindly applying the generic 3% reference class.

Neither forecaster meaningfully engages with the NY Fed finding that "~75% of tariff-affected firms passing on some cost increases" as a live, ongoing inflationary channel — this is dismissed via Deloitte's moderating assumption, but if tariff escalation resumes (e.g., new rounds), this pass-through could compound with residual energy volatility, a compounding-shock scenario neither model discusses.

Both forecasts are nearly identical in structure and reasoning (same evidence, same anchor, same conclusion ~4-5.5%), suggesting insufficient independent stress-testing of tail scenarios — e.g., a renewed Iran/Mideast escalation or an oil price shock analogous to May's driver — which historically has been the dominant cause of >5% breaches per the brief's own base-rate note ("historically driven by 1970s oil shocks... 2021-22 pandemic surge"), yet neither model quantifies this specific scenario probability separately from the generic base rate.

Confidence levels (0.78, 0.76) seem high given both models acknowledge meaningful unknowns (Aug-Dec prints unavailable, no true Kalshi order-book data, exact PIIE timing unclear) — this stated confidence may not fully reflect the residual data-gap uncertainty flagged in the brief's "Gaps/unknowns" section.

6. Aggregator Fable 5 · final calibrated forecast

5% (77% confidence)

Yes: 5% No: 95%

The 2026 peak (4.2% in May) already passed without breaching 5%, and CPI has cooled to 3.4% with two straight months of declines, so YES now requires a fresh shock larger than the Iran-war spike within just five remaining prints. Getting from 3.4% to above 5% YoY would take an abrupt ~1.6pp acceleration — no forecaster (even hawkish PIIE at ~4%) or market signal (breakevens ~2.3%) supports this. The critique correctly notes the 'any single month' trigger and live tariff pass-through channel keep tail risk alive, which justifies staying near rather than far below the Polymarket 7% anchor. I set YES at 5%, splitting the two forecasts while retaining modest energy/tariff-shock tail risk.

Pipeline Timing

Total pipeline time: 176.4s

Per-tool research timings shown in the Research section above.