U.S. inflation is believed to have reached its peak in May 2026, according to Kalshi market participants, who cite a significant drop in energy prices during June. Energy costs, which had driven inflation to a 4.2% year-over-year high in May, fell sharply after a mid-June ceasefire, leading to lower gasoline prices. This decline is influencing market expectations for the upcoming Consumer Price Index (CPI) report, scheduled for release on July 14, 2026. As a result, market participants on platforms like Polymarket are pricing June’s annual inflation with a notable probability that it will be 3.6% or less.
The dramatic reduction in energy prices, particularly gasoline, appears to be a major factor in this downward inflation expectation. A decrease from average gasoline prices of $4.60 per gallon in May to $3.918 by late June is contributing to the anticipated reduction in headline CPI. Currently, Polymarket shows a 47% probability for annual inflation to be 3.8% in June, suggesting that participants view the decline in energy prices as a key indicator for lower inflation figures.
Speculation around the CPI figures has also influenced other related markets. For instance, the probability of June’s inflation being 3.7% stands at 33% on Polymarket, as participants anticipate further details from the Bureau of Labor Statistics and other economic indicators leading up to the report’s release.
