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Inflation surge in 2026? — At least 4%

KXLCPIMAXYOY-27-P4 · Economics · 2026-05-04
78%
Agent
87%
Market Price
-9.2%
Edge
55%
Confidence
Volume: 132,059
Spread: 0.1c
Days to resolution: 285
Markets in event: 8
Final Rationale
I ACCEPT Challenge 2 (base effects sign error): 2025 H2 prints were 2.4-2.7%, so favorable base effects in H2 2026 actually support higher YoY readings, not suppress them — this was a directional error worth ~5pp. I PARTIALLY ACCEPT Challenges 1, 3, and 4: the 8-month 'any month' optionality from a 3.3% March base with tariff pass-through still arriving means I underweighted upside paths, and headline (not core) is what resolves this — worth another ~10-15pp. I PARTIALLY ACCEPT Challenge 5: the market at 87% on high liquidity (14,430 depth) with a +22pp 7-day move strongly suggests informed traders are pricing the March CPI shock and tariff persistence, but I retain some skepticism because energy could moderate further with the Iran ceasefire and April print could come in soft. My final 78% reflects substantial deference to the market and accepted reasoning corrections, while preserving ~9pp of divergence for genuine uncertainty about whether headline actually crosses 4.0% (vs peaking at 3.7-3.9%).
Price vs. prediction
How the market moved after the agent's call. Solid blue line is the actual market price; dashed line is the agent's static forecast at $t{=}0$.
$n = 58$ follow-ups
Re-scan Context
This market has been scanned before. Previous predictions:
DatePredictedMarket PriceConfidence
2026-04-13 52% 65% 45%
1. Planner Opus · Fermi decomposition + tool plan
Tools chosen: kalshi_data fred_data article_search web_search code_execution kalshi_orderbook
Sub-questions (Fermi decomposition)
  1. Is the current inflation trajectory (as of mid-2026) elevated enough that CPI YoY will reach 4% in any month from May through December 2026? (w=0.50)
  2. Will tariff-driven price pressures and supply chain disruptions push CPI above 4% YoY in 2026? (w=0.30)
  3. Did CPI YoY already reach 4% or above in any month in January–April 2026 (i.e., has the market already resolved or nearly resolved YES)? (w=0.20)
Planner reasoning
This question resolves YES if CPI YoY hits ≥4% in ANY single month in 2026. As of May 4, 2026, we need to check: (1) whether any Jan-Apr 2026 prints already crossed 4% (which would immediately resolve YES), and (2) if not, whether May-Dec 2026 prints could cross 4%. Key reference classes: CPI was at ~2.4% in late 2024, rose to roughly 3%+ range by early-mid 2025 due to tariff announcements, and likely continued rising into 2026. The 2025 tariff regime (25% on Canada/Mexico, 145% on China, broad 10% baseline) represents a major supply shock not seen since 1970s oil embargoes. Fed and bank economists estimated 1-2pp tariff pass-through to consumer prices over 12-18 months. Temporal analysis: The tariff effects begin passing through to consumers with a 3-12 month lag. Tariffs were announced in Q1 2025, so maximum pass-through would hit CPI data in Q3-Q4 2025 through Q2-Q3 2026. If CPI was ~3.0-3.5% YoY in Q1 2026, reaching 4% requires only a 0.5-1.0pp additional push — well within the tariff pass-through range. The key 'any month' structure of this question is important: it only takes ONE month to breach the threshold. What makes this different from typical inflation questions: (1) The 'any month' resolution rule gives significant upside probability — even a brief tariff-driven spike counts. (2) 2026 base effects from 2025's elevated prints could actually suppress YoY readings later in the year. (3) Whether the Fed has successfully anchored expectations or lost credibility matters enormously. Check prediction market pricing as a key signal of current market wisdom.
2. Research Parallel tool calls · legacy v2
ToolStatusTimeItemsSummary
kalshi_data OK 1.4s -
fred_data OK 1.0s -
article_search OK 0.8s -
web_search OK 53.9s -
code_execution OK 0.0s -
kalshi_orderbook OK 0.2s -
3. Evidence Synthesis Sonnet · 18 items · legacy v2
#StrengthCredibilityDirectionSourceClaimPriced In
1 STRONG 95 ↓ DOWN article_search CPI YoY was 2.4% in both January and February 2026, well below the 4% threshold. Neither month resolved the question YES. Yes
2 STRONG 95 ↓ DOWN article_search CPI YoY was 2.7% in December 2025, unchanged from November, indicating inflation was below 4% entering 2026. Yes
3 STRONG 92 ↓ DOWN web_search March 2026 CPI YoY came in at 3.3%, driven by a 10.9% monthly energy surge and 21.2% gasoline spike due to the Iran war starting Feb 28 — still below 4% threshold. Yes
4 STRONG 90 ↓ DOWN web_search April 2026 CPI report is scheduled for release on May 12, 2026 — not yet published as of May 4, 2026. No Jan–Apr 2026 month has confirmed ≥4% YoY CPI. Yes
5 STRONG 90 ↑ UP web_search Core PCE (Fed's preferred gauge) reached 3.2% YoY and headline PCE hit 3.5% YoY as of April 30, 2026 data — suggesting underlying inflation momentum is building but not yet at 4% for CPI. Yes
6 STRONG 92 ↑ UP web_search March 2026 CPI YoY jumped sharply to 3.3% from 2.4% — only 0.7pp below the 4% threshold — with the Iran war energy shock as the primary driver. Yes
7 MODERATE 65 ↑ UP web_search One analyst projects CPI could peak at about 4% before dropping to ~3% by end of 2026 if Iran conflict ends by April — indicating a possible brief 4% breach is within the base case forecast. Yes
8 MODERATE 72 ↓ DOWN web_search Energy prices moderated in April 2026 following a reported U.S.-Iran ceasefire, and Fed officials signaled they could 'look through' the March spike, suggesting energy may not sustain 4%+ prints. Yes
9 STRONG 90 ↓ DOWN web_search Core CPI (ex-food and energy) rose only 0.2% MoM and 2.6% YoY in March 2026, well below the 4% threshold, indicating underlying inflation is contained and the 4% reading would require sustained energy or supply shock. Yes
10 MODERATE 70 ↑ UP code_execution From a 3.3% YoY base (March 2026), reaching 4% requires only a ~0.7pp additional increase over remaining months; from 3.5%, the gap is just 0.5pp — well within tariff or energy pass-through range. No
11 STRONG 95 ↑ UP fred_data FRED shows CPIAUCSL index level of 330.293 as of March 2026, consistent with the 3.3% YoY figure reported. Energy sub-index (CPIENGSL) shows massive YoY change indicating the Iran war energy shock is confirmed in the data. Yes
12 MODERATE 68 ↑ UP article_search Around 80–85% of tariff costs were absorbed domestically by corporations or passed to consumers per supply chain expert analysis from April 2026, with retail, automotive, consumer goods and pharma still navigating the new tariff regime. Yes
13 STRONG 80 ↑ UP article_search After Supreme Court struck down some tariffs in Feb 2026, Trump used alternative legal authority to reimpose them within hours; economists say prices won't drop regardless, as the tariff regime is entrenched. Yes
14 MODERATE 75 ↑ UP article_search February 2026 CPI at 2.4% was described as reflecting tariff pass-through still 'working its way through to households' wallets' — suggesting additional tariff-driven inflation was anticipated to arrive in subsequent months. Yes
15 MODERATE 60 ↑ UP code_execution Estimated tariff pass-through range of +0.5 to +2.0pp on CPI; combined with Iran war energy shock already delivering +0.9pp in a single month (March), the cumulative path toward 4% is plausible. No
16 MODERATE 72 ↑ UP article_search Mark Zandi (Moody's) said in March 2026 that he saw 'no sense that inflation is decelerating,' reflecting ongoing concern about stubborn underlying pressures from tariffs and the Iran war. Yes
17 STRONG 82 ↑ UP kalshi_data Kalshi market for CPI ≥4% in 2026 (any month) is priced at 86.9% as of the data snapshot, with a sharp +21.9pp rise in 7 days and +23.4pp over 30 days, reflecting major market belief this will occur. No
18 MODERATE 75 ↑ UP kalshi_orderbook Kalshi orderbook shows high liquidity (14,430 depth), yes_bid at $0.15 (implying the market is confident in YES), with a wide spread suggesting some residual uncertainty. No
Information Gaps
  • April 2026 CPI print (due May 12, 2026) is not yet available — this is the most critical missing data point that would confirm or deny whether the threshold was nearly breached in April given March energy moderation.
  • Exact state of Iran war / ceasefire durability as of early May 2026 — energy price trajectory depends heavily on whether the Strait of Hormuz remains open.
  • May–December 2026 CPI forecasts from major banks/Fed are not directly cited in the evidence — only indirect analyst commentary.
  • No direct data on tariff pass-through by specific product category in Q1-Q2 2026 to assess whether non-energy categories are building toward 4%.
  • No information on base effects from high 2025 prints that could suppress YoY readings in H2 2026.
  • Unclear whether the FRED YoY change figures (e.g., +10.5 for CPIAUCSL) represent index point changes rather than percentage changes — could be misinterpreted as percentage, which would be implausibly high.
Key Uncertainties
  • Whether the Iran war ceasefire holds and energy prices remain moderated — if the war restarts, energy could spike again and push CPI toward or above 4%.
  • Whether April 2026 CPI (releasing May 12) will show a pull-back from March's 3.3% due to energy normalization, or hold/increase.
  • The duration and intensity of tariff pass-through into consumer prices in Q2-Q3 2026.
  • Whether the Fed will raise rates preemptively to prevent a 4% print, potentially dampening demand-side inflation.
  • Base effects: if 2025 had elevated readings, YoY comparisons in H2 2026 would be harder to exceed.
  • Whether the Kalshi market price of 86.9% reflects new private information (e.g., early April CPI estimates) or is primarily driven by the March 3.3% print and analyst projections.
Market Context
Price: 0.869 · 7d: +0.219 · 30d: +0.234
Volume: MODERATE-HIGH (1356 avg daily contracts) · Depth: HIGH (14,430 depth)
Reliability: HIGH — large recent price move suggests market is incorporating new information (likely March CPI at 3.3% and PCE at 3.5%), high liquidity adds credibility; the 7-day +21.9pp surge is a strong directional signal that new information materially shifted the probability
4. Independent Forecaster Opus · No market price · legacy v2 Did NOT see market price
Independent estimate: 54% (43% confidence)
base rate
55%
45% conf
evidence driven
55%
45% conf
contrarian
52%
40% conf
Spread
3pp
Low disagreement
sq1: Will CPI YoY reach 4% in any month May-Dec 2026?
55%
Base rate: CPI breaching 4% in any single month over an 8-month window is uncommon historically (~15-20% in normal regimes), but elevated when starting from 3.3% with active supply shocks. From March's 3.3%, only 0.7pp gap remains. Iran war energy shock pushed prints up; even with ceasefire, tariff pass-through continues. Headline PCE at 3.5% suggests momentum. Pushes UP: tariff pass-through still arriving (+10%), analyst projections of ~4% peak (+10%), small gap to threshold (+15%). Pushes DOWN: core CPI only 2.6% suggests no broad inflation (-10%), energy moderating post-ceasefire (-8%), base effects from elevated 2025 prints could suppress H2 YoY (-5%), Fed likely to act if approaching 4%. Net: ~55%.
sq2: Will tariff-driven pressures push CPI above 4% YoY in 2026?
50%
Tariff regime is entrenched (Trump reimposed via alternative authority post-SCOTUS). 80-85% pass-through estimates suggest meaningful CPI impact. Tariff pass-through estimated at +0.5 to +2.0pp. Combined with energy shock already in data, the path to 4% is plausible but not certain since core CPI remains contained at 2.6%, suggesting much of pass-through has been absorbed by margins or hasn't fully arrived. Zandi's 'no deceleration' comment supports persistent pressure. ~50%.
sq3: Did CPI YoY already reach 4% in Jan-Apr 2026?
8%
Confirmed: Jan 2.4%, Feb 2.4%, March 3.3%. April release is May 12, not yet out. For April to print ≥4%, would require 0.7pp jump from March in single month, which is extremely rare absent another massive shock. With Iran ceasefire and energy moderating in April per evidence, April more likely flat or down from March. Small probability (~8%) reflects April uncertainty only.
Show full reasoning trace
base rate: CPI breaching 4% in any single month over 8 months from a 3.3% starting point is moderately likely given active supply shocks but uncertain. Historical base rate for crossing such thresholds during tariff/energy shock regimes is elevated (~40-60%).
evidence updates: March 3.3% print is closest evidence — only 0.7pp from threshold (+15% from base). Headline PCE 3.5% (+5%). Tariff pass-through ongoing (+10%). Core CPI 2.6% suggests no broad acceleration (-10%). Iran ceasefire moderating energy (-8%). Base effects from elevated 2025 prints could suppress H2 YoY (-5%).
combination method: Treated sq1 (May-Dec breach) and sq3 (Jan-Apr breach) as semi-independent paths to YES; sq2 (tariffs) is a driver that's already partially reflected in sq1. Combined via OR logic with correlation adjustment.
final: Probability ~55%. The 'any month' resolution provides upside, but March's 3.3% actually showed a peak driven by transient energy shock that's now moderating. Core inflation contained at 2.6% is the main reason this isn't 70%+. April print (releasing May 12) will be highly informative.
ensemble: {'ensemble_count': 3, 'perspectives': {'base_rate': {'p_yes': 0.55, 'confidence': 0.45}, 'evidence_driven': {'p_yes': 0.55, 'confidence': 0.45}, 'contrarian': {'p_yes': 0.52, 'confidence': 0.4}}, 'spread': 0.03, 'individual_p_yes': {'base_rate': 0.55, 'evidence_driven': 0.55, 'contrarian': 0.52}}
5. Devil's Advocate Sonnet · legacy v2 Market price revealed
Asymmetric Evidence Reasoning Flaw Math Error
Challenges
  1. The forecaster may be underweighting that the question is 'ANY month May-Dec 2026 ≥4%' — an 8-month window with multiple independent shots. From a 3.3% March base with confirmed tariff pass-through still arriving and analyst projections pointing to a ~4% peak, the probability of at least one month touching 4% should arguably be higher than 55%. The forecaster cites core CPI at 2.6% as a major dampener, but the question is about HEADLINE CPI, where energy and tariff-affected goods drive the prints.
  2. The negative adjustment for 'base effects from elevated 2025 prints' (-5%) may be miscalibrated. 2025 prints were 2.4-2.7% (low, not elevated), so base effects in H2 2026 could actually FAVOR higher YoY readings, not suppress them. This appears to be a directional reasoning error.
  3. The forecaster treats the Iran ceasefire as durably moderating energy (-8%), but flags ceasefire durability as an information gap. Given a 285-day window, even a temporary re-escalation would likely push at least one monthly print to 4%. The downside adjustment may be too large given the asymmetric risk over 8 months.
  4. Evidence balance is 12 UP vs 6 DOWN with multiple STRONG UP signals (PCE 3.5%, March 3.3% jump, entrenched tariffs, 80-85% pass-through), yet the final forecast sits near 50/50. The evidence aggregation seems to under-weight strong upward signals.
  5. The market moved +21.9pp in 7 days and +23.4pp in 30 days on high liquidity (14,430 depth) — this is a strong signal that informed traders are incorporating the March CPI shock and tariff persistence. The forecaster has no information the market lacks; the divergence is hard to justify on reasoning grounds alone.
Suggested adjustment: +15pp
Adjust upward primarily due to (1) likely sign error on base effects (2025 was low, so H2 2026 YoY should be HELPED not hurt), (2) under-weighting of the 8-month 'any month' optionality from a 3.3% starting point with active tariff pass-through, and (3) under-weighting strong UP evidence (PCE 3.5%, entrenched tariffs, analyst peak projections at 4%). These are reasoning flaws independent of the market price, though the market's strong directional move on high liquidity provides corroborating evidence that the forecast is too low.
Market comparison: Forecaster: 54%, Market: 87%. The 33pp divergence is large. While markets can be wrong, the forecaster identifies no information the market lacks, and several reasoning issues (base effects sign error, under-weighting 8-month optionality, asymmetric evidence treatment) all point in the direction of the market. A meaningful upward adjustment is warranted on reasoning grounds, though not all the way to 87% given genuine uncertainty about energy moderation and core CPI containment.
6. Aggregator Opus · final calibrated forecast
78% (55% confidence)
I ACCEPT Challenge 2 (base effects sign error): 2025 H2 prints were 2.4-2.7%, so favorable base effects in H2 2026 actually support higher YoY readings, not suppress them — this was a directional error worth ~5pp. I PARTIALLY ACCEPT Challenges 1, 3, and 4: the 8-month 'any month' optionality from a 3.3% March base with tariff pass-through still arriving means I underweighted upside paths, and headline (not core) is what resolves this — worth another ~10-15pp. I PARTIALLY ACCEPT Challenge 5: the market at 87% on high liquidity (14,430 depth) with a +22pp 7-day move strongly suggests informed traders are pricing the March CPI shock and tariff persistence, but I retain some skepticism because energy could moderate further with the Iran ceasefire and April print could come in soft. My final 78% reflects substantial deference to the market and accepted reasoning corrections, while preserving ~9pp of divergence for genuine uncertainty about whether headline actually crosses 4.0% (vs peaking at 3.7-3.9%).
7. Entry Decision Opus Trader
Side
NO
Position Size
$600
Contracts
4839
Trader Confidence
55%
Trade Rationale
The forecast points to NO with an edge of -9.2% (market at 87.2% vs forecast 78.0%), which exceeds the 5% minimum threshold. However, multiple factors push me toward a small position: the Devil's Advocate flagged three serious issues (asymmetric_evidence, reasoning_flaw, math_error) and suggested a +0.15 adjustment, which would actually flip the edge to positive. Forecaster confidence is moderate at 0.55, and the rationale itself acknowledges substantial deference to market pricing with informed traders reacting to the March CPI shock. The April CPI print on May 12 (8 days away) is a major near-term catalyst that could quickly resolve the uncertainty. Going against an 87% market with high liquidity and informed flow on a macro question is risky.
Allocation Logic
Sizing at $600 reflects a real but low-conviction edge: the critic's +0.15 adjustment would eliminate the edge entirely, the forecaster's own confidence is only 0.55, and a key data print in 8 days could quickly invalidate the thesis. Minimum-tier sizing is appropriate here.
Entry price: $0.12
Current: $0.03
Status: LOST
P&L: -$454.84