A comparative analysis of electron energy-loss spectroscopy (EELS) spectra for the 1D insulating cuprate Sr2CuO3 with transferred momentum q--> axially and radially to the chain axis allows one to elucidate the structure of the charge transfer gap in in-chain response. It is determined by the superposition of two types of excitations with different magnitudes of dispersion. The low-energy response with q--> radially to the chain direction, but yet within the plane of CuO4 plaquettes, exhibits also a dispersionless peak near 2 eV. The theoretical simulation of the EELS data using exact diagonalizations of an appropriate extended Hubbard Hamiltonian for relevant clusters requires the explicit consideration of low-lying oxygen 2p pi states within the CuO4 plaquette plane beyond the standard pd sigma extended Hubbard model widely used for cuprates with corner-shared CuO4 plaquettes.