April BLS CPI & Truflation's CPI Spaces Recap - May 12, 2026
May 12, 8 AM ET, Truflation hosted its monthly X Spaces session to share our CPI forecast and economic report highlights ahead of the official BLS release.
The session featured Truflation's Head of Data, Oliver Rust, presenting the proprietary forecast, followed by a discussion with economists and market analysts Jim Bianco (Bianco Research), E.J. Antoni, PhD (Heritage Foundation), and Mike Lee (Mike Lee Strategy). Michael Green, and Truflation's CEO, Stefan Rust. The session concluded with a Q&A from the audience.
Or listen to our 12 May Spaces on Twitter:
Executive Summary
Truflation's model forecast April CPI at 3.7% year-over-year. The actual BLS print came in at 3.8%, slightly above the forecast. Energy — specifically gasoline and oil prices — was the dominant driver of the upside, with secondary effects beginning to bleed into goods categories including apparel, airline tickets, and logistics. Services inflation showed signs of cooling due to slowing wage growth, but shelter components came in higher than expected due to a statistical anomaly related to the government shutdown the previous September.
Key Numbers:
- Truflation April CPI forecast: 3.7% (year-over-year)
- Actual BLS CPI print: 3.8% (year-over-year)
- Core CPI: +0.3% month-over-month (in line with expectations)
- Shelter month-over-month: +0.6%; Rent: +0.5%; OER: +0.5%
- Transportation Services: +4.3% year-over-year
- Wage growth (unit labor costs): ~3.6% — real wages negative at 3.8% CPIThe
- 10-year Treasury yield at approximately 4.40% at the time of the discussion (with 4.468% high on May 12th)
- Fed Funds Futures pricing ~32% chance of a hike in 2026
Topics Covered in Spaces Discussion
- Truflation Methodology
- April CPI Drivers: Gasoline, Goods, Airlines, Services, Shelter
- Shelter Statistical Anomaly (Jim Bianco)
- Energy and the Iran War — Macro Impact
- Inflation Outlook — Q2 and Beyond
- Real Wages and Consumer Stress
- Federal Reserve Policy
- Interest Rates (Jim Bianco)
- Global Supply Chain Risks (Oliver Rust / Mike Lee)
- Yen/Dollar and Japan (Audience Q&A)
- Truflation Rental Methodology (Audience Q&A)
Cleaned up transcript
Opening — Natalia (Truflation, Head of Marketing)
Good morning everyone. This is Natalia, Head of Marketing for Truflation. We are doing our monthly Spaces today with the CPI forecast ahead of the BLS CPI release. As usual, we'll start with Oliver Rust, our Head of Data, who will introduce our forecast, our forecasting model, and the macro trends based on our real-time data. We'll then move into discussion with our guests: Jim Bianco from Bianco Research, EJ Antoni PhD from the Heritage Foundation, and Mike Lee from Mike Lee Strategy.
CPI Forecast Presentation — Oliver Rust (Truflation, Head of Data)
Oliver: Good morning everyone. For those who don't know Truflation, we track more than 15 million price points of goods and services daily across more than 30 data partners. We combine all that data to create the Truflation Index. We then match our data to BLS categorization, apply their weightings, and that becomes our True BLS Index.
Oliver: To create a forecast, we have to slow down our data in certain categories to match the BLS — for example, housing is significantly delayed. We also adapt for hedonic calculations and substitution adjustments, and we convert our daily data into monthly figures.
Oliver: This month, we are again seeing the CPI bloc increasing, driven primarily by the energy category — specifically oil and its effect on gas prices. There has been no relief in the continued elevation of gasoline prices.
Oliver: Looking at the CPI forecast: the market range is 3.5% to 3.9% year-over-year. Truflation is forecasting 3.7%. That would be a significant rise from March's 3.3%. The main drivers are energy and gasoline, which are now bleeding into other categories — jet fuel and airline tickets, logistics costs, and goods in general. Apparel in particular is seeing higher input costs due to tariffs on new seasonal collections.
Oliver: Services inflation is cooling somewhat, driven by slower wage growth. However, hospitality and entertainment sectors — dining, hotels — continue to see elevated labor cost growth due to demand and labor shortages. Net-net: goods are accelerating, services are cooling.
Oliver: Looking ahead to Q2, our original base case was CPI around 2.9-3.0%. We are now likely revising that upward to 3.1-3.2% due to sustained energy prices. We then expect an easing in Q3 toward approximately 2.6% by end of quarter. The key risks include further tariffs — particularly on autos — elevated fertilizer costs feeding into food prices, fiscal stimulus supporting demand, and reduced immigration adding to wage pressure.
Comment on Housing — Jim Bianco (Bianco Research)
Jim: On the housing component — the BLS surveys rental units twice a year. You don't need to call every month because rents don't change that quickly. Back in September, those units were surveyed during the government shutdown, so the BLS simply assumed unchanged prices and carried the last survey forward. Those same units were surveyed again in April, so effectively you're capturing roughly 12 months of change at once — a statistical double-count. That could push this number up noticeably. Separately, on energy: April average gasoline prices were up about 11% month-on-month. Gasoline is 2.8% of the CPI weighting. Multiply those together and gasoline alone accounts for about 0.3 percentage points of the CPI move. Everything else being equal, that's the story.
Energy as Inflation Driver — EJ Antoni (Heritage Foundation)
EJ: Before the Iran war, energy was actually the story driving inflation down. Prices were going negative — energy was deflationary. It was energy fluctuations that were dictating headline inflation movements, while core was surprisingly steady. Now it's still an energy story, but unfortunately moving in the wrong direction.
EJ: The Cleveland Fed is running Q2 at an annualized 5.83% inflation rate. When you get an energy shock, it's initially insulated to just energy. But energy affects the price of everything. It's obvious with physical goods on grocery shelves — that gallon of milk got there on a diesel truck. It's less obvious with services, but your accountant drives to work, they put gas in their tank. Everything is affected ultimately.
EJ: We're already seeing it in public transportation and airlines. American Airlines just said they've had to reduce their profit forecast by $4 billion due to higher jet fuel costs. It was probably the nail in the coffin for Spirit Airlines, which was restructuring out of its second bankruptcy.
EJ: In the coming months, you will start to see median CPI and trimmed mean CPI — which remove volatility like food and energy — start to catch up to headline, as fuel costs filter through to everything else.
EJ: On the flip side, when the war ends and the Strait reopens, you won't get an immediate snapback to pre-war oil prices. Everyone has been ripping through their strategic reserves at a torrid pace to minimize the shock. Once the Strait reopens, all of those countries will need to replenish reserves. We're replacing a supply shock with a demand shock. The Texas median oil producer break-even, per the Dallas Fed survey, is in the high $70s. Prices will come down significantly, but they're not going back to $60.
Global Supply and Demand Implications — Mike Lee (Mike Lee Strategy)
Mike: The other impact is global. Rare earth materials, raw materials, batteries, semiconductors, food — all facing significant supply bottlenecks. Shipping costs from China to the US and Europe have skyrocketed. Governments are making policy decisions to try to insulate their populations. There's still a lot coming our way that we're not fully aware of yet.
Real Wages and Consumer Stress — Jim Bianco
Jim: If you look at the Cleveland Fed forecast, year-over-year inflation is tracking near 3.8-3.9% by May. Wage growth — unit labor costs — is running at around 3.6%. That puts us in negative real wage territory again. The last time we saw that was 2022, and it triggered a massive collapse in consumer confidence. We're already at a 74-year low per the University of Michigan. Nothing infuriates the public more than watching their paycheck fall behind prices at the store.
Jim: We're already starting to see a political response: the President has mentioned a federal gasoline tax holiday. This will likely become the dominant political issue. You could argue we're in a situation where wage inflation is too low — if wages can't keep pace with prices, it becomes a real problem for the half of the country living paycheck to paycheck. Bankrate's survey shows roughly half of Americans cannot cover a $1,000 emergency without borrowing. For them, there's no asset cushion — no rising brokerage account or home equity to offset higher grocery bills.
Confirming Consumer Stress — EJ Antoni
EJ: I'd just emphasize we're already there. Real average weekly earnings are still down roughly 4% from January 2021. Under this administration they rose a couple of points, but in March alone real wages gave back half of their gains. The credit data is also very clear: people are coping with higher energy prices by putting everything on credit cards — at near-record credit card interest rates. The K-shaped economy is very real.
Money Supply and QE Concerns — Mike Lee
Mike: The Federal Reserve has also changed their monetary policy somewhat — rotating out of MBS products as they mature and reinvesting into other assets. The money supply has been increasing again, which suggests a possible drift back toward quantitative easing. Normally that would be inflationary on top of everything else.
Federal Reserve — Kevin Warsh and the Transition — Jim Bianco
Jim: Whatever you think about Fed policy today might be completely different by Friday, because we get a new Fed chairman. Kevin Warsh had his first confirmation vote yesterday and should be approved before Friday. Once he's confirmed, I expect him to give a major policy speech early next week laying out his priorities. Warsh believes strongly in forward guidance — but right now the Fed and the market are pointing in different directions. The Fed is signaling an eventual cut. The market is pricing about a 32% chance of a hike. Warsh will need to reconcile that.
Jim: There's also a Supreme Court ruling expected in the next month on what 'for cause' means for firing a Fed governor. The case centers on Lisa Cook, accused of improperly filling out mortgage applications. If the court gives the president any leeway, Jay Powell could be next. If two more seats open, it changes the entire dynamic of the Board.
Fed Chair Transition Analysis — EJ Antoni
EJ: Warsh's plan involves pairing balance sheet reduction with eventual rate cuts, but undoing the ample reserves regime — built up under Bernanke and expanded under Powell — will take time. It's not as if he can walk in on day one and announce interest rate cuts. The market is right to temper its expectations.
Interest Rate Thesis — Jim Bianco
Jim: I continue to look for higher interest rates. My primary thesis is that rates should approximate nominal growth in the economy. If nominal growth is 5% and you can borrow at 2%, bad investments return a profit — that creates distortions. If rates are at 7% and the economy grows at 5%, even good ideas can't get funded. Right now the economy is doing well, nominal growth is rising, and that means rates should trend higher. We hit 4.85% on the 10-year last year. Five percent is not a stretch.
Jim: The ultimate question on oil — and therefore on all of this — is: when does the Strait of Hormuz reopen? Goldman Sachs and JP Morgan are estimating early-to-late June. That changes everything. Wall Street needs to stop being fertilizer and urea experts and start figuring out the military and diplomatic answer to that question.
Initial BLS Print — Jim Bianco (live reaction)
Jim: Numbers are out. CPI rose 0.6% month-over-month — in line with expectations. Core rose 0.3%, as expected. Headline year-over-year is 3.7% — wait, I'm reading the wrong column. Let me correct: headline is 3.8% year-over-year. Slightly above the 3.7% estimate. Core is 2.7% year-over-year — a rounding error below the 2.8% Wall Street consensus. So it's a near miss: the market largely got this one right, but headline came in a touch hotter than expected.
Shelter Analysis Post-Print — EJ Antoni
EJ: Looking at the components, transportation services was a big contributor — up 4.3% year-over-year. Shelter is 3.3% year-over-year, which is actually less than headline, so the shelter catch-up Jim predicted may not be the dominant factor today. The slight core beat might be partially attributable to the BLS shutdown adjustment, but transportation was the bigger story.
Michael Green's Commentary — Michael Green
Michael Green: This is largely as expected. I push back on some of the rental component analysis — I also think people are missing seasonal dynamics. I lean in the direction that this is ultimately deflationary for the consumer, for the pressure reasons Jim and EJ mentioned. When we're running on bad data — rent as measured by BLS versus Zillow or contemporary rent indices — we're essentially driving with a cracked rearview mirror.