Prediction markets assign nearly 40% odds of U.S. inflation exceeding 5% this year, defying Wall Street forecasts of a decline.
Traders on prediction platforms are pricing in a nearly 40% chance that U.S. inflation will surpass 5% in 2026, a level not seen since February 2023. The shift follows April’s 3.8% annual inflation print, the highest since May 2023, driven by soaring energy costs and rising core prices.
Wall Street economists expect inflation to peak at 3.8% this quarter before easing to 2.8% by year-end, according to FactSet. However, households align more closely with prediction markets, with a University of Michigan survey showing consumers anticipate 4.5% inflation over the next year.
Core inflation, excluding food and energy, rose 0.4% in April and 2.8% year-over-year. Analysts warn that rising input costs for food and materials could prolong price pressures beyond energy shocks.