Forecast markets expect U.S. inflation to slow in July
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. The U.S. Bureau of Labor Statistics is set to release the report on Wednesday morning.
As of Monday, Kalshi traders estimated the probability that annual CPI inflation in July would exceed 3.3% at less than 55%. They estimated the probability of the figure exceeding 3.4% at 15%.
Economists surveyed by Dow Jones forecast a 3.4% year-over-year increase in the overall Consumer Price Index. In June, the figure stood at 3.5%, although the Dow Jones consensus forecast had predicted 3.8%. At that time, the index also fell by 0.4% compared to the previous month—the largest decline in more than six years, which CNBC attributes to a temporary drop in energy prices.
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Some of Kalshi’s contracts relate to core inflation, which excludes food and energy prices. 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%.
The Dow Jones consensus for core inflation is 2.5% in July, down from 2.6% in June. The Consumer Price Index reflects the average change in prices for goods and services purchased by consumers. The U.S. Federal Reserve will take this data into account when making interest rate decisions at its September meeting.
The results of Kalshi’s inflation contracts are subject to verification by data from the U.S. Bureau of Labor Statistics. CNBC also notes that it has a business relationship with Kalshi, which includes customer acquisition and a minority investment.
