November CPI Has a Hole at 4.1%

8Factor Report #10: November CPI Has a Hole at 4.1%

Kalshi's ladder for November's annual inflation rate prices "above 4.0%" and "above 4.1%" at the same 21¢. Taken literally, that's a 0% chance that inflation prints exactly 4.1%, while its neighbors at 4.0% and 4.2% each get 10–13%. That gap is the first positive-edge trade of this sprint.

*Predictagon 8Factor Report · No. 10 · November 4, 2026 · Read-only analysis. Not financial advice.*

The market at a glance

Kalshi, "CPI YoY in November 2026" (resolves on the BLS headline rate, one decimal):

Kalshi, "CPI in November 2026" (month over month): above 0.1%: 62/65¢ · above 0.2%: 40/44¢ · above 0.3%: 10/25¢.

Trade it on Kalshi →

The 8Factor scorecard

Verdict: MARGINAL. The center is fair; the 4.0/4.1 rungs are not. The ladder's median sits right at 3.8%, close to where we'd put it. But "above 4.0%" and "above 4.1%" trade at the same price, so the market prices an exactly-4.1% print at zero. Buying the 4.0 rung and selling the 4.1 rung costs 103¢, pays at least 100¢, and pays 200¢ if CPI prints exactly 4.1%. After fees it breaks even at about a 6.5% chance of 4.1%. We think that chance is closer to 11%.

Why this market, why now

This is the second question on Predictagon's Top 5 Picks economy scoreboard: "Will November's CPI report show annual inflation above October's rate?" Picks lock on December 10, the day the report comes out. (The economy questions aren't open on the board yet.)

Where inflation stands. September CPI, released October 14, came in at 3.7% year over year, up from 3.4% in August, with a 0.6% monthly jump. Gasoline rose 9.1% in the month and accounted for more than half of the increase. Core inflation, excluding food and energy, was 2.6% on the year. October CPI comes out in mid-November.

What the ladder says. Reading the mids as probabilities, the market's distribution for November's headline rate is:

The center makes sense: a modal 3.8%, one tick above September. The 4.1% bucket is the anomaly.

Factor 1 · Compare: Grade C

Question: does the ladder agree with itself?

Mostly, with one break. A cumulative ladder ("above X") should fall as X rises, and each step down is the probability of landing exactly on that rung. Here:

A smooth distribution can't put 13% on 4.0, 0% on 4.1 and 10.5% on 4.2. The likeliest explanation is that the two rungs trade separately with different active traders, and nobody has lined them up.

The grade is C because this is a single venue: we found no matching Polymarket ladder in our pull.

Factor 2 · Fair value: Grade B−

Question: what's the right distribution for November's headline rate?

> AI fair value ("above 3.8%," i.e. 3.9% or higher): 35% low · 45% mid · 55% high. Confidence: B−.

The center. September was 3.7%, driven by gasoline. Whether November prints 3.7, 3.8 or 3.9 depends mostly on fuel prices over the next month and on base effects from late 2025. We have no strong edge on either, so our center is close to the market's, slightly lower (45% vs 47.5%) because core inflation is only 2.6% and doesn't support a broad acceleration.

The 4.1% bucket. Smoothing the market's own neighbors gives about 11–12% for an exactly-4.1% print. We use 11%. There's no economic reason for inflation to skip a tenth of a point.

Divergence on the pair: market ~0% vs fair ~11% for the 4.1 bucket.

Factor 3 · Net edge: Grade B

The ladder spread (per pair of contracts):

That's about 4–5% on capital over 36 days, with a guaranteed floor of about −6.4¢ per pair if CPI misses 4.1%. A positive expected value is what makes this MARGINAL: real, but small, and dependent on the ladder staying mispriced long enough to fill.

Depth: these two rungs have done ~72K and ~93K contracts, with 2–4¢ spreads. Fills of a few thousand contracts are realistic; much more would move the book.

For the Picks question itself (November above October), the answer depends on October's print, which is not out yet. We'll grade it after the October CPI release.

Factor 4 · Timing: Grade B

Five-week clock with an early-exit path: B.

The Red Team: four ways this call breaks

Our call is "the 4.1% bucket is priced at zero and is worth about 11%."

Red 1 · Rounding and resolution rules

The trade depends on how Kalshi rounds the BLS figure and whether "above 4.0%" means strictly above. If the venue resolves on the unrounded index change, or treats 4.0% differently from what we assume, the 4.1% bucket could be narrower or wider than a tenth.

Watch: the exact resolution text for both rungs before trading.

Red 2 · The market knows something about 4.1%

Unlikely, but possible: if October's print or base effects make November land very precisely at 4.0% or 4.2%, a near-zero 4.1% bucket could be right. Inflation doesn't usually behave that way, but the market's view on the center is sharp.

Watch: the October CPI release. If November's center moves well away from 4.0–4.2%, the 4.1% bucket shrinks along with its neighbors.

Red 3 · Energy moves the whole ladder

A big move in gasoline shifts November's center by several tenths. If the center moves to 3.5% or 4.5%, the 4.1% bucket ends up in a tail and the spread's expected value falls, though the floor stays at about −6.4¢.

Watch: weekly gasoline prices and crude through November.

Red 4 · The plumbing: fills and fees

The edge is a few cents. If you can't fill both legs at these prices, or fees run higher than our formula, the trade turns negative. Two-legged trades on thin rungs often fill one side and not the other.

Watch: queue depth on both rungs, and fill both legs before counting the edge.

Bottom line

The headline question here (is inflation still rising?) is fairly priced. The mispricing is in the plumbing: two adjacent rungs that never got lined up. Small, specific and checkable is the kind of edge 8Factor exists to find.

New 8Factor Reports publish every week at Predictagon.com/8Factor.

Data notes and methodology

Sources: BLS: CPI, September 2026 · CNBC: September CPI breakdown · Fox Business: September CPI · Kalshi: Economics markets