Yahoo TV

Recent inflation data has left markets uncertain about the Federal Reserve's next steps in combating inflation through potential rate cuts. As consumers feel the pressure of higher prices, National Retail Federation Chief Economist Jack Kleinhenz joins Yahoo Finance to discuss the state of the consumer.

Kleinhenz states that March's hotter-than-expected CPI data "created more uncertainty" around the Fed's monetary policy path, with the report revealing that inflation "remains the number one problem for households and consumers." However, he notes that retail has seen a slight deceleration in inflation, indicating that "inflation pressure is still in the service industry, not so much in the goods industry."

While Kleinhenz acknowledges that credit card delinquencies are a "concern to be watched," he states that the overall balance sheets of households are generally "in pretty good shape." Nevertheless, he observes an "evolution" over the past couple of years, with consumers becoming "smart shoppers."

However, as they continue to spend and necessities become more expensive, he says services inflation will be "a major headache for households."

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This post was written by Angel Smith