Traders on Kalshi are predicting a less than 55% chance that July's CPI will exceed 3.3% year-over-year, with only a 15% likelihood of it surpassing 3.4%. This contrasts with the Dow Jones consensus estimate of 3.4%, which is slightly lower than June's reported rate of 3.5%. The CPI is a critical indicator for the Federal Reserve as it prepares for its September meeting regarding interest rates.
In June, the CPI fell 0.4% month-over-month, marking the largest decline in over six years, primarily due to a temporary drop in energy prices. Additionally, traders see a 47% chance that the core inflation rate, which excludes food and energy, will exceed 2.4%, with only an 11% chance of it going above 2.5%. The Dow Jones estimate for core inflation is set at 2.5%, down from June's 2.6%.
The Bureau of Labor Statistics will release the official CPI report on Wednesday morning, which will be closely watched by investors and policymakers alike