economy
Traders believe inflation could near 5% this year
Prediction market traders see two-in-three odds that inflation will go above 4.5% this year, and nearly 40% odds that prices will accelerate above 5%.
TL;DR
- Headline inflation rose 3.8% in April, the fastest pace since May 2023.
- Prediction market traders anticipate inflation exceeding 4% in 2026 and see a nearly 40% chance of it surpassing 5% this year.
- Economists polled by FactSet forecast a peak of 3.8% in the current quarter, falling to 2.8% by year-end.
- Consumers surveyed by the University of Michigan expect inflation of 4.5% over the next year.
- The closure of the Strait of Hormuz and the Iran conflict have driven up energy prices, a primary driver of headline inflation.
- Core inflation also rose 0.4% in April and 2.8% year over year.
- Shelter, airfares, and lodging prices also increased in April.
- Traders believe there's a greater than 50% chance the Federal Reserve will raise interest rates by July 2027.
- Continued disruption in oil supply could shift central bank policy.