Jerome Powell, the Federal Reserve Chair, recently hinted that an interest-rate cut could be on the table at the next Fed meeting in September. This news comes as inflation has been easing somewhat over recent months, providing some relief to consumers. However, despite this positive development, a report released by Bankrate reveals that nearly a third of U.S. consumers are still expecting to put themselves into debt during the upcoming back-to-school shopping season.
According to the report, 24% of parents plan to accumulate credit card debt for back-to-school shopping, while another 13% intend to use buy-now-pay-later services such as Affirm, Afterpay, and Klarna. This data is a stark contrast to 2022 when inflation was at a 40-year high, and 29% of parents said they planned to go into debt to purchase school supplies for their children.
Bankrate analyst Ted Rossman commented on the findings, stating, „As inflation has come down, Americans have become more comfortable paying for things like back-to-school shopping. Shoppers aren’t clutching their wallets nearly as tightly this year.“ This shift in consumer behavior can be attributed to the decrease in inflation, with consumer prices rising a modest 2.9% in the 12 months through July, as reported by the Labor Department.
Despite the slight reprieve in inflation, a majority of parents (52%) still expect to pay more for back-to-school shopping this year compared to last year. This persistent pressure of inflation has led consumers to adapt their shopping habits, with 32% of parents stating that inflation has influenced how they approach back-to-school shopping. Additionally, 28% of parents reported searching harder for deals and coupons, while 22% had to budget specifically for these expenses.
Rossman highlighted that many individuals are resorting to credit card debt out of necessity, either for emergency expenses or daily costs exceeding their take-home pay. He emphasized the challenges of high credit card balances and interest rates, noting that while inflation is decreasing, prices are still rising, albeit at a slower pace. Rossman stressed the importance of sustained wage growth outpacing inflation to alleviate financial burdens on consumers.
The National Retail Federation estimates that total back-to-school spending this year will reach $38.8 billion, a decrease from last year’s $41.5 billion. To help consumers save on back-to-school supplies, retailers like Walmart, Target, Kohl’s, Amazon, Walmart, Staples, Dollar Tree, and Dollar General are offering various deals on school essentials. Additionally, discounts on laptops and other electronic devices are available for students and parents looking to make cost-effective purchases.
In conclusion, as the back-to-school shopping season approaches, consumers are navigating the impact of inflation on their budgets. While the prospect of an interest-rate cut by the Federal Reserve offers some hope, it is essential for individuals to be mindful of their spending habits and seek out cost-saving opportunities when purchasing school supplies. By leveraging discounts, utilizing leftover supplies, and spreading out purchases, families can better manage their expenses during this challenging economic climate.
