Back-to-school shopping is in full swing, and while the prices of some products have notably fallen from last year’s season, inflation is still pinching parents across the country.
Annual headline inflation peaked in June of last year, punching in at over 9% for the first time in decades. Since then, annual inflation has fallen nearly every month and is now at 3.2%, nearly down to the Federal Reserve’s goal of 2%. Compared to last year, some back-to-school shoppers might notice a bit of relief, but it is worth noting that overall prices are still much higher than just two or three years ago.
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Items like back-to-school shoes, computers, computer software, textbooks, and sporting goods all cost less than they did this time last year. Meanwhile, back-to-school clothing, daycare and preschool costs, musical instruments, and back-to-school haircuts all cost more money today than they did in July 2022 as parents were gearing up for the return to school.
But with all the moving parts, experts are mixed on whether consumers will spend more or less than last year’s back-to-school shopping season.
The National Retail Federation thinks that shoppers will spend more money this year than last year, breaking the record for the most expensive year. The NRF predicts back-to-school spending will hit a record of $41.5 billion, up from $36.9 billion last year and eclipsing the previous high of $37.1 billion notched in 2021.
Shopping began for many earlier this summer, with 55% of respondents in an NRF survey saying they already began their shopping as of early July. Families with children in kindergarten through high school plan to spend an average of $890 on back-to-school items this year, which is about $25 more than last year’s record of just over $864, and would be a new record.
“Back-to-class shopping is one of the most important consumer shopping occasions of the year," said NRF President and CEO Matthew Shay. “Our research for 2023 shows American consumers are eager to jump-start their back-to-school and college purchases early.
“Retailers have been preparing for months to ensure they are well stocked with essential items that families and students need for the school year,” he added.
But consulting firm Deloitte predicts that back-to-school spending for those with children in kindergarten through the 12th grade will actually decrease by some 10% compared to last year’s levels.
The firm expects that the overall back-to-school market will decrease to $31.2 billion, although the market will remain above pre-pandemic spending levels, increasing by more than 12% since 2019. Deloitte’s research shows that parents will spend just under $600 per student this year, 10% less than last year.
A big part of why parents might end up spending less on school supplies this year comes down to their individual financial situation. Parents will try their best to find savings and economize this shopping season, favoring mass merchants and online retailers, according to the Deloitte survey.
Given higher interest rates (the Fed has been hiking its rate target since March 2022 in response to high inflation), parents are opting to use more cash this year. Deloitte found that 77% of shoppers will use cash, while just over half will pay using credit cards for their back-to-school purchases.
“With budgets strained this season, continued high prices could dampen the excitement of the back-to-school season for many families,” said Nick Handrinos, vice chairman at Deloitte LLP. “Parents are likely to be strategic about their spending to help ensure children are set up for success at the start of the school year by renewing school supplies but perhaps holding off on new clothing until needed.”
Some of the biggest savings from last year to now, as tracked by the consumer price index, will be found in the electronics department. Computer software and accessories are just about 7% cheaper now than in July of last year, and computers themselves are down nearly 5%. Parents wanting to give their child a new back-to-school smartphone will encounter savings of more than 17%.
Some food items will also be cheaper. Peanut butter, a staple for PB&J sandwiches, is 1.7% less expensive this shopping season than last. But other kid-friendly food items are more expensive, like breakfast cereal, which costs just over 5% in July of this year compared to last July.
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Clothes for the new school year will largely be more costly. Boys’ clothing costs 3.4% more this year, and girls’ clothes prices are up a more pronounced 7.2%. Apparel prices for infants and toddlers have risen nearly 6%. Meanwhile, boys’ and girls’ shoes are just over 1% cheaper than this time last year.
For college students, tuition and fees have risen by an average of 2% over the past year. But college textbooks cost 3.6% less this coming semester than last year.