Parents scout savings as they shop for back-to-school supplies

John Horton is having to be strategic in his search for back-to-school supplies for his 28 students — his own two grade school-aged kids and the elementary school students he teaches in St. Paul.

Even though Horton started his shopping early, he is already worried his normal budget will come up short with higher prices on everything from folders to composition notebooks.

Back-to-school has always been a major shopping event as consumers search for new clothes and supplies for their kids. But shoppers this year face mounting inflation and are predicted to spend a bit more per household.

"Prices have gone up a little bit every year, but this year it seems like it's a huge difference," Horton said. "It's much more noticeable. … Everything just adds up."

He normally spends about $1,000 of his own money to make sure his classroom is well stocked for the start of the year with basic items such as crayons, markers, sports equipment, and pet supplies for the class pet tortoise.

In addition, he and his wife also spend about $300 on back-to-school shopping for their son in elementary school and daughter in middle school.

But this year, Horton doesn't know how far their dollars will go. Folders that used to cost 25 cents are now 50 cents. Even buying books and molding clay seems like an indulgence he might not be able to afford on top of the essentials his classroom needs.

According to the National Retail Federation (NRF), U.S. households with children in elementary through high school are expected to spend an average of $864 this year, up $15 from last year. Total spending is anticipated to track about $36.9 billion, pretty close to the record $37.1 billion predicted last year.

For families with college students, each household is likely to spend about $1,200, which nearly matched last year as well.

Some retail analysts say people spent more last year as many students returned to some version of in-person learning. And while this year's spending trend may be similar, they suggest it has more to do with high inflation.

Just last month the price of consumer goods jumped 9.1% compared to a year ago — the biggest year-over-year increase in more than four decades. Most of the respondents to NRF's survey (84%) expect to see higher prices while shopping.

Steeper prices will force many parents to spend more money though they will likely buy the same number of items or slightly fewer, said Matt Marsh, managing partner of Deloitte's Minneapolis office.

Deloitte recently conducted a local survey of Minnesotans who plan to go back-to-school shopping. The professional services firm predicts Minnesota parents will spend $700 per child on average , a 3% increase from last year. Marsh categorized this spending as being virtually flat — or even declining — when factoring in how much prices have risen.

But even with such high prices, back-to-school shopping has become nonnegotiable for many parents, he said.

"Parents are going to spend [money] on their kids because that's what parents do," Marsh said. "The perception is that back to school has become an event similar to a holiday."

About half the parents Deloitte surveyed are concerned about the impact of inflation on school-supply prices. About 42% said their households were in worse financial situations than they were last year versus 20% that shared that sentiment in 2021.

More than one-third said they were worried about making upcoming school-related payments and the majority (69%) expect the economy to weaken in the next six months.

Horton, who teaches first- through third-graders at J.J. Hill Montessori Magnet School in St. Paul, said he has had to be more intentional on where and when he shops to find the best deals on supplies.

Despite searching for some gently used clothing at Goodwill, Horton thinks he also will need to re-examine what are must-haves for clothing for his own kids. His family has already cut back on some summer discretionary spending such as going out for ice cream.

"Everything is so much more expensive," Horton said. "I'm just trying to find ways to make it work."

According to the NRF, 38% of consumers surveyed said they were scaling back in their other spending to cover the cost of school items. The majority of consumers planned to scout for deals during large retail sale events, such as Minneapolis-based Target's Deal Days, which had its highest sales ever earlier this month.

To better afford supplies, some respondents also indicated they were working overtime, using "buy now, pay later" options and doing more product comparisons online, Katherine Cullen, NRF's senior director of industry and consumer insights, said during a Tuesday webinar.

Despite the challenges, consumers are still spending significantly more on school items than they did before the pandemic. In terms of category, the growth in spending on electronics during the pandemic has contributed largely to the overall increase in back-to-school purchases during the past few years, Cullen said.

"Kids grow every year. They need new clothes," Cullen said. "School supplies get worn out. They need to be replaced. And it really is appearing as if electronics are becoming a core category for the season. We are seeing consumers really treat this the way they do other essential categories and other essential areas where they are very much protecting their spend and prioritizing their spend for the season."