With oil and gas prices falling in the wake of the detente between the U.S. and Iran, prediction market traders now think inflation has peaked. 

Speculators on prediction market platform Kalshi think there’s only a 28% chance that headline inflation this year climbs above 4.2%, the annual rate of increase in the Consumer Price Index in May. 

The next CPI report, measuring inflation in June, is due for release by the Bureau of Labor Statistics (BLS) on July 14.

The contract on Kalshi asks if traders think CPI will deliver a reading above various percentages in 2026. Contracts are resolved using the CPI data released each month by the BLS.  

The inflation outlook has eased primarily due to recent declines in its main driver: energy prices. After shooting higher after the start of the U.S.-Iran war in late February and the subsequent closure of the Strait of Hormuz, gas and oil prices have started to retreat after the partial reopening of the waterway.

Average national gasoline prices as of Wednesday stood at $3.84, according to AAA, down from more than $4.50 at their peak. That reflects weaker U.S. crude oil prices, which have fallen below $70 per barrel for the first time since the war began. 

Energy prices in May accounted for 60% of the CPI’s month-over-month increase. 

Now the decline in gas prices is leading Kalshi traders to think that CPI in June will show prices falling by 0.2% compared with May, in-line with Wall Street consensus estimates.