The transition from summer fun back to the classroom will be even tougher than usual this year thanks to the ballooning cost of back-to-school essentials.
A July survey from Deloitte found back-to-school spending is expected to hit a record high of $34.4 billion this year for K-12 students. That's about $661 per student — up 8% from last year.
“I think most of that is driven by inflation, more so than increasing demand from students and parents,” says Claire Tassin, retail and e-commerce analyst at market research firm Morning Consult.
Now, Tassin adds, many parents and students are making tradeoffs when it comes to their discretionary spending in order to afford their more critical purchases.
“From what we're seeing, shoppers seem to be treating back-to-school as a largely essential expense.”
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Inflation is hitting the back-to-school market as well
Americans are dealing with increased prices across the board, but aside from rent, gas and groceries, back-to-school expenses are taking precedence right now as well.
Tassin notes that while many schools offered remote learning during the peak of the pandemic, the return to the classroom could mean some sectors are seeing increased spending.
Clothing seems to be the costliest category, according to a Morning Consult report released in June — 45% of parents said they planned on spending $101 to $250 on apparel. And while prices haven’t jumped as high as they have on gas or groceries, you may still end up paying more for your clothes than you would have last year.
The same report found that 36% of parents are saying they can afford their kids’ back-to-school shopping, significantly less than the 52% who said they could manage it last year.
Tassin, who authored the report, points to the stimulus checks, advance child tax credit payments and pandemic savings that helped many households afford their essentials last year.
The COVID-19 stimulus checks mainly went toward covering food, household and personal care products and rent, mortgage or utility payments, according to data from the U.S. Census Bureau.
However, Americans no longer have these supports in place to help them weather the current economic climate.
Back-to-school spending is further straining consumer wallets
A quarter of respondents in Tassin’s study said they planned to spend over $500 on their back-to-school shopping this year, compared to just 7% last year.
Tassin notes this shopping season could contribute further to household debt, with more shoppers relying on their credit cards and savings.
Credit card debt surged between April to June this year, and it was 13% higher than it was in 2021 — which the Federal Reserve Bank of New York says is the biggest cumulative increase in over two decades.
Already, over half of Americans are living paycheck to paycheck — and while higher-income households may be able to absorb inflated prices into their spending, lower-income groups are struggling to foot the bills.
And while the Fed has hiked interest rates in an attempt to curb inflation, economists foresee a potential downturn in the economy that Americans need to prepare for as well.
“I'm worried about people further dipping into their savings to afford back-to-school shopping … as we are potentially heading into a recessionary environment,” Tassin emphasizes.
Look out for summer sales — and sales tax holidays in certain states
Now is the “prime time” for getting your back-to-school gear, says Tassin. “That's when retailers are going to be trying to pull everybody in with deals and promotions.”
However, she does suggest spreading out your shopping, instead of doing it all in the same month, so that you can still meet your other monthly expenses and bills.
She also recommends doing some of your shopping on Amazon Prime Day — which passed in July this year, though CNBC claims another could arrive in the fall — and keeping a look-out for other sales events around that time.
“The biggest thing is just to take advantage of the competitive environment in retail and shop around,” advises Tassin.
Retailers are reportedly overloaded with merchandise, due to consumers cutting back on shopping to deal with inflation. Some big-box stores, like Walmart and Target are offering more discounts to get rid of their surplus.
Tassin notes there’s a rising trend in shoppers buying secondhand, while the National Retail Federation reports more shoppers are planning on making use of savings tactics like coupons and buying store brand or generic products.
Depending on what state you live in, you may also be able to take advantage of some tax-free events on clothing, school supplies and tech.
There are 18 state governments that planned sales tax holidays in time for back-to-school shopping this year. Although most of these events have already passed, there are five still upcoming or ongoing. Keep in mind that different exclusions or price limits may apply.
State sales tax holidays
Connecticut: Aug. 21-27
Illinois: Aug. 5-14
Maryland: Aug. 14-20
Massachusetts: Aug. 13-14
Texas: Aug. 11-13
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.