The April 2026 Consumer Price Index of All Urban Consumers (CPI-U) report indicates that inflation increased by 0.6% this month, down from 0.9% in March. These data were released at 8:30 am EST on May 12, 2026, by the Bureau of Labor Statistics (BLS). Before seasonal adjustment, the year-over-year (Y-o-Y) inflation rate in the all-items index grew by 3.8%, as higher energy prices accounted for over 40% of the monthly increase.
This month’s results also exceeded economists’ consensus estimates. The table below is courtesy of Investing.com. The left column represents April’s figures, while the right column represents forecasters’ expectations. As you can see, the data was slightly hotter than anticipated.
Yet, as the on-again, off-again, conflict between the U.S. and Iran persists, crude oil continues to hold policymakers hostage. The original assumption among market participants was that the duration of the oil surge would determine whether or not the FOMC needed to raise interest rates. And with little progress made toward lowering WTI prices and alleviating the inflation ramifications, more watching and waiting are likely for at least a couple of months.
Food Prices
The food index rose by 0.5% in April after being flat in March. Five of the major grocery indices increased this month, while one decreased.
- Cereals and bakery products (+0.1%)
- Meats, poultry, fish, and eggs (+1.3%)
- Dairy and related products (+0.8%)
- Fruits and vegetables (+1.8%)
- Nonalcoholic beverages (+1.1%)
- Other food at home (-0.4%)
In addition, the food away from home index increased by 0.2%, as restaurant inflation underperformed grocery inflation in April.
Energy Prices
The energy index jumped by 3.8% MoM in April following a 10.9% increase in March. Gasoline prices rose by 5.4%, electricity by 2.1%, and natural gas fell by 0.1%.
Core CPI
The April core CPI rose by 2.8% Y-o-Y, above the 2.6% print from March. Below is an itemized breakdown of the various components:
- Shelter index: (+0.6%) [March: +0.3%]
- Rent index: (+0.5%) [March: +0.2%]
- Owners’ equivalent rent: (+0.5%) [March: +0.3%]
- Motor vehicle insurance: (+0.1%) [March: +0.0%]
- Medical care services: (+0.0%) [March: +0.0%]
- Physician services: (+0.6%) [March: +0.7%]
- Hospital services: (-0.3%) [March: +0.4%]
- Airline fares: (+2.8%) [March: +2.7%]
Seasonally Unadjusted CPI
Before seasonal adjustments, the CPI-U for April 2025 increased by 3.8% Y-o-Y to an index level of 333.020. Since these figures are unadjusted, they include regular seasonal price fluctuations that can create volatility in the results.
Still Going Strong
While the geopolitical conflict has taken a toll on other regions, the U.S. has been a relative outperformer. For one, the U.S. is the largest oil producer in the world, so higher prices aren’t as problematic as they are for net-importing countries. Second, with the U.S. labor market still in solid shape, the FOMC doesn’t have to worry about the second half of its dual mandate.
The BLS reported on May 8 that “Total nonfarm payroll employment edged up by 115,000 in April, and the unemployment rate was unchanged at 4.3 percent.” More importantly, the result outperformed economists’ consensus estimate (115k vs. 65k), reinforcing the belief that the labor market is stronger than expected.
Similarly, JOLTS job openings came in at 6.866 million vs. 6.860 million on May 5, and the report noted how “The number of hires increased to 5.6 million (+655,000), and the rate increased to 3.5 percent in March, more than offsetting decreases in those measures the previous month.”
Thus, with the metric attempting to reverse its years-long downtrend, the bounce in March was welcome news for the FOMC.
Finally, a declining inventory-sales ratio could help support economic growth in the back half of the year.
To explain, when the blue line above is falling, it means that U.S. business inventories are declining as a percentage of sales. Eventually, these firms will need to increase production to replenish their inventories, which typically supports GDP growth and employment. As a result, a potential restocking cycle could provide the FOMC with more leeway to focus on inflation rather than worry about growth and employment.
Turning to the financial markets, while volatility continues to whipsaw gold, Citigroup has mostly bullish scenarios unfolding in the months and years ahead.
To explain, the base case (~50% probability) is a steady rise to $5,000; the bull case (~30%) is a sharp rally to $6,000 in 2026 and $7,000 in 2027 under stagflation and prolonged geopolitical stress; the bear case (~20%) is a drop to ~$4,000. Add it all up, and with the potential upside more than the potential downside, the investment bank remains constructive on gold’s future prospects.
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Alex Demolitor is a Canadian financial writer hailing from Halifax, NS. Alex has a Bachelors Degree from King's College and passed the CFA Exam Level III. He specializes in fundamental analysis of the stock, bond, commodity, and FX markets. He also covers US & Canadian economic indicators.
