Truflation BEA PCE Price Index - Monthly Report - April 2026

Inflation Status - Gas, Gas, and more Gas

The story behind April’s PCE Price Index is once again oil and its increasingly broad impact across the inflation basket.

Oil prices have been highly volatile throughout April. West Texas Intermediate crude opened April at $100.12 per barrel, fell to $82.59 by April 17, before rebounding sharply to close the month at $105.07, moving back above the $100 threshold. This has fed directly into consumer fuel prices, with regular gasoline surpassing $4.40 per gallon nationally at the end of April, up from $4.12 at the beginning of the month, according to the Truflation U.S. CPI Gas Index.

Long-term disruptions originating in the Strait of Hormuz are now beginning to materialize in physical supply shortages. The lagged impact moving through global energy supply chains continues to widen. While governments have attempted to offset the disruption through strategic reserve releases, this has had a limited impact on prices at the consumer level. Even if the Strait fully reopens, restoring normal supply flows could take months, suggesting elevated energy prices may persist into the summer.

The U.S. Strategic Petroleum Reserve has declined sharply, with inventories falling by 22.4 million barrels in April and a further 18.5 million barrels in the first three weeks of May. That represents a drawdown of 40.9 million barrels since the beginning of April, nearly 10% of total reserves in less than two months. While the U.S. remains energy independent in a broad sense, much of the crude released from the SPR is feeding global markets, particularly Asia, rather than directly easing domestic supply constraints.

Exhibit 1 – SPR  in thousands of barrels 

Source: U.S. Energy Information Administration (EIA)

The impact on consumers is becoming increasingly visible. Inflation expectations have deteriorated sharply since February, with both short and long-term expectations rising according to the University of Michigan Consumer Sentiment Survey.

At the same time, consumer sentiment continues to weaken with a fall of 10% month on month in May and is down 14% year on year, reaching historically depressed levels as inflation expectations accelerate in response to higher fuel prices and broader geopolitical uncertainty. One-year inflation expectations have risen to 4.8%, up from 3.4% in February.

Exhibit 2: Short & long term expectations worsening

Source: University of Michigan

Truflation Forecast for April PCE

Against this backdrop, Truflation estimates that the BEA PCE Headline Price Index will print with a 0.56% month over month and 3.9% year over year for April, slightly above the market consensus of 3.8%.

Beyond gasoline, inflationary pressure is increasingly visible across goods, particularly non-durable goods, where gasoline remains the dominant contributor but is now being joined by apparel and other consumer categories.

Manufacturing prices also accelerated materially in April. The U.S. S&P Global Flash Composite PMI Output Index showed manufacturing activity rising to a four-year high, driven in part by significant inventory stockpiling. Manufacturing input prices recorded their steepest increase since June 2022, while manufacturing selling prices rose to their highest level since September 2022.

Services prices also moved higher, though at a slower pace than goods. Energy-related cost pressures pushed services input inflation to a one-year high, allowing service providers to raise selling prices to a ten-month peak.

Exhibit 3 – Truflation BEA PCE Year on Year Key Inflationary Metrics: Goods vs Services vs Core

Looking ahead, manufacturing price pressures are likely to remain elevated in the near term while energy markets remain disrupted. However, as supply chains normalize, some of this pressure could ease later in the year.

Goods vs Services Inflation

In April, the largest upward contributors to PCE inflation were concentrated in non-durable goods, led by Gasoline and Apparel. Gasoline rose approximately 14% month on month, making it the single largest contributor to headline inflation.

Apparel was the second largest contributor. Several factors appear to be driving this move, including tariff pass-through on imported clothing, particularly from China, Vietnam, Bangladesh, and Mexico, elevated freight, warehousing  and trucking costs, and finally seasonal pricing resets as spring and summer collections are introduced.  Together, these forces are now showing up more clearly in consumer retail prices.

Within services, the largest upward contributors were Food Services, Transportation Services, and Financial Services & Insurance.

Food services, which includes restaurants, takeout, fast food, cafeterias and bars, rose on a combination of higher labor costs, rising food input prices and seasonal demand. The primary driver remains labor. Restaurants remain one of the most labor-intensive sectors of the economy and wage inflation continues to feed directly into menu pricing through rising hourly wages, higher minimum wages across several states and continued labor shortages in hospitality.

Transportation services rose in April as higher fuel prices coincided with stronger seasonal travel demand. Higher oil prices pushed up airline fuel costs, trucking and freight expenses, rideshare operating costs and broader transportation logistics costs.

Finally, financial services and insurance also rose, though to a lesser extent, with the main driver being insurance premiums, particularly auto insurance, where consumers continue to face higher repair costs, more expensive replacement parts and rising labor costs in vehicle maintenance. Health insurance premiums also remain elevated as claim severity continues to rise. Even where claim frequency is stable, higher average claim costs are pushing insurers to continue repricing policies upward.

Exhibit 4 – Truflation BEA PCE Categories  Year on Year trends

Inflation Outlook – Elevated then Gradually Moderating

Several key forces continue to shape the inflation outlook through Q2:

• Tariff policy: Most countries currently face a 10% tariff rate, with additional tariffs under consideration, particularly in the European auto sector. Further tariff measures are expected during the summer as ongoing trade investigations conclude.

• Geopolitical costs: Energy remains the clearest channel but inflationary pressure is spreading beyond oil into fertilizers and industrial inputs. Even if the Strait of Hormuz reopens, supply losses accumulated during the disruption will take time to replace, likely keeping oil prices elevated. Fertilizer prices have also surged, with both anhydrous ammonia and urea rising between 15–35% month over month.

• Fiscal stimulus: Tax cuts associated with the Big Beautiful Bill, currently flowing through the economy, are supporting consumer demand and adding stimulus.

• Housing disinflation tailwind is fading: Housing inflation has cooled on an annualized basis and is now close to flat. While the housing market remains weak, the pace of disinflation is slowing and the downside contribution from housing is fading.

• Immigration policy changes: Reduced labor supply resulting from immigration policy changes may continue to place upward pressure on wages, particularly in labor-intensive sectors, contributing to services inflation.

• Sticky services inflation: Services inflation has moderated somewhat through 2025, but remains persistent. If wage growth stabilizes or reaccelerates, it may keep core inflation elevated.

• Consumer resilience: Retail spending remains firm, supported by tax refunds and residual household savings. Continued consumer resilience may slow the pace of disinflation.

Summary

The most likely near-term outcome remains a choppy, range-bound inflation environment, with headline inflation highly sensitive to energy volatility. Truflation suggests that the recent surge in oil prices is increasingly feeding through into broader categories beyond gasoline, particularly goods, transportation and supply chain-linked services. Food prices have so far remained relatively contained, but upside pressure is building through higher fuel, logistics and fertilizer costs.

While broader structural disinflationary forces remain in place, inflation risks are increasingly concentrated in volatile commodity-linked categories. 

Over the medium term, headline PCE should gradually trend lower, but not in a straight line. A normalization in Middle East supply conditions would ease energy inflation and eventually reduce pressure across goods. However, categories such as food and transportation remain areas to watch closely.

The recent downward revision in GDP adds further complexity. With inflation still above target and energy prices rising, the risk of a more stagflationary environment has increased. This leaves the Federal Reserve System facing a more difficult policy trade-off. The probability of rate cuts in 2026 has diminished and the possibility of a prolonged pause cannot be ruled out.

About Truflation

Truflation provides a set of independent inflation indexes drawing on 30+ data partners/sources and more than 15 million product prices across the US. These indexes are released daily, making it one of the most up-to-date and comprehensive inflation measurement tools in the world. Truflation has been leveraging this measurement tool to predict the BLS CPI number, with a 99.93% accuracy in predicting inflation in the last 12 months.

APPENDIX

Truflation BEA PCE Category Percentage Change Data

Month over Month and Year over Year

All Data is based on April 2026