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Will headline CPI YoY exceed 4.0% by June 2026?
The Condition
Strait of Hormuz sustained disruption (>50% traffic reduction for 14+ days) before June 30, 2026
Our Ensemble Estimates
Given Hormuz sustained disruption: Will headline CPI YoY exceed 4.0% by June 2026?
Given Hormuz reopens: Will headline CPI YoY exceed 4.0% by June 2026?
Causal Effect
Sustained Hormuz disruption increases the probability of headline CPI exceeding 4.0% by +50pp (82% vs 32%), up from +47pp. The widening reflects ACCELERATING classification and gasoline pass-through making the IF TRUE case nearly mechanical while IF FALSE rose more modestly on non-oil channels.
Why This Matters
Tests whether sustained Hormuz disruption pushes headline inflation past the 4.0% threshold through compounding energy price pass-through.
Condition Resolved
The condition was TRUE. The IF TRUE branch is now the active prediction.
Resolution Criteria
BLS CPI report for May 2026 data (released mid-June 2026) shows all-items CPI-U YoY change exceeding 4.00%
Source Analysis
Inflation is driven by compounding supply-side pressures across three simultaneous channels: energy supply shock, tariff cost-push, and natural gas surge; pre-shock core PCE already sticky at 2.8-3.0% and re-accelerating