Traders price near-40% chance of U.S. stagflation by end-2026 as inflation bets rise

Kalshi traders now assign a nearly 40% probability that the U.S. economy will enter stagflation by the end of 2026, up from 11% about three months earlier, CNBC reported. The shift reflects rising concern that inflation could remain elevated while labor-market conditions weaken. The U.S. Bureau of Labor Statistics said on May 12, 2026, that April CPI rose 3.8% from a year earlier, the largest annual increase since May 2023. Producer prices also posted their biggest annual gain since 2022. In a separate Kalshi contract, traders put the chance of U.S. inflation reaching at least 4.5% in 2026 at more than 65%, compared with the FactSet analyst consensus of 2.8%. The April unemployment rate held at 4.3% and has remained above 4% since May 2024. Kalshi traders now put the probability of a soft landing at 21%, down from 55% in early March. Polymarket traders were less pessimistic as of May 14, 2026, pricing a 22% stagflation chance and a 32% soft-landing chance.