How high will inflation get in 2026?

Traders currently price "Above 3%" at 100% for "How high will inflation get in 2026?". Over the past 24 hours that probability moved up 1.5 points. Full distribution: Above 3% 100%, Above 4% 100%, Above 3.5% 100%, Above 4.5% 19%. The market has traded $1.4M in total volume and resolves Dec 31, 2026. Recent US inflation data shows headline CPI easing to 3.4% year-over-year in July 2026 from 3.5% in June, with core CPI at 2.5%, reflecting moderation in shelter and food components despite lingering energy price pressures from the Iran-related supply shock. The Federal Reserve has held the federal funds rate target at 3.5-3.75%, with FOMC projections and market-implied odds now tilting toward one or more hikes by year-end rather than cuts, as policymakers monitor sticky components and labor market conditions. Key upcoming releases include the August CPI on September 11 and the next FOMC meeting, which could shift trader sentiment on 2026 peaks if geopolitical tensions ease or reaccelerate. Broader dynamics, including household inflation expectations around 3.6% one-year ahead, underscore uncertainty around whether readings will climb above 4% or continue trending lower.

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