Robert Spendlove
As families prepare for the 2024-25 school year, forecasters are penciling in a drop in back-to-school spending. Total K-12 spending is expected to decline from $41.5 billion in 2023 to $38.8 billion this year, with back-to-college spending falling from $94 billion to $86.6 billion, according to the National Retail Federation.
Families stocking up on school essentials plan to shell out an average of $875 for primary and secondary school students and $1,365 for college students, the NRF reports. That’s slightly down from $890 and $1,367, respectively, in 2023.
The projected dip may be a sign of weakening consumer demand coupled with slowing inflation. Overall prices dropped from May to June for the first time since the start of the pandemic. And over the past 12 months, wage growth has outpaced inflation. Average unadjusted weekly earnings grew 4 percent over the past year, compared to 3 percent annual inflation. This means families are finally regaining some of the purchasing power lost to pandemic-era inflation.
When it comes to back-to-school expenditures, you might notice greater price relief in what you pay for goods — physical items like textbooks, computers and smartphones — compared to the cost of services — intangible offerings like tuition and haircuts. That’s because goods prices have largely stabilized, while service prices continue to climb.
Some examples of services that have become more expensive over the past year include elementary and high school fees, daycare and preschool tuition and haircut prices, according to Consumer Price Index data. Meanwhile, goods like smartphones, computers, children’s shoes and college textbooks have gotten cheaper.
Will the cooling prices of early summer continue? If so, back-to-school shoppers may get a longer recess from inflation. The July Consumer Price Index, which will be released on Aug. 14, will provide more insight. If the index continues to slow, it would be a strong case for the Federal Reserve to cut interest rates in the next few months.
Here are a few ways to sharpen your budgeting skills and help keep back-to-school spending in check:
- Make a plan. Before you hit the stores or shop online, have a clear idea of what you need and how much you want to spend.
- Budget for the big picture. Don’t budget for each item individually. Instead, decide what your child will need and pick a dollar amount to cap your overall spending.
- Involve children. Use back-to-school shopping as an opportunity to teach kids about budgeting. Letting children have a say in shopping decisions can help them learn invaluable money lessons.
Robert Spendlove is senior economist for Zions Bank, a division of Zions Bancorporation NA, in Salt Lake City.