Shoppers getting squeezed by inflation are worried back-to-school shopping will further strain their already tight budgets, according to a recent Bankrate report.
This fear is pushing most consumers, specifically middle-income households, to rely on money-saving tactics to offset these costs, according to a Bankrate survey of over 2,400 U.S. adults.
Of those surveyed, 41% revealed that inflation, which climbed 8.5% in July, will change the way they shop for the 2022-2023 school year. Nearly all of these shoppers — about 95% — are employing money-saving strategies.
This year, families with children in elementary through high school will spend an estimated average of $864 on school items, according to the National Retail Federation.
BACK-TO-SCHOOL RETAIL SPENDING EXPECTED TO GROW 7.5% WITH DEPARTMENT STORES MAKING A COMEBACK
On average, this is $168 more than what shoppers spent three years ago.
Of the people in the Bankrate survey that said inflation would likely change how they shop, nearly 40% said back-to-school shopping would strain their budgets. A quarter of them said they are less likely to have money set aside for back-to-school purchases, and 30% of these shoppers said they will feel pressured to spend more than they typically do.
PARENTS AND TEACHERS SEEK OUT RETAILER BACK-TO-SCHOOL SALES AMID HIGH INFLATION
Since back-to-school items are essential, more than half of those who say inflation will change their shopping habits will search for coupons, sales or other discounts. Forty-five percent of these shoppers expect to buy fewer items and 43% will buy cheaper brands.
Nearly 40% of these shoppers will stick to stores where they have loyalty accounts or store-specific credit cards. Many money-conscious shoppers are also looking to buy more used and secondhand items, delay their purchases or use credit card rewards to offset costs.
The back-to-school shopping burden has been most jarring for middle-income households earning between $50,000-$99,999 annually, Bankrate senior industry analyst Ted Rossman told FOX Business.
“Lower-income households have been struggling with back-to-school expenses and other financial issues for a while. It’s harder because of inflation, but it’s a trend they’re familiar with, unfortunately,” Rossman said.
However, middle-income households are getting squeezed financially like never before as costs rise across the board. These increases — from gas and groceries to mortgage rates and rent — make back-to-school shopping “especially uncomfortable for many this year,” Rossman added.
BACK TO SCHOOL 2022: TAX-FREE SALES BY STATE
The data showed that middle-income households are more likely to get more used or secondhand items, reuse old items and even seek out more coupons, discounts or sales compared to lower and higher-income households.
Shoppers heavily leaning on credit cards, though, should be cautious due to rising interest rates, Rossman added.
According to Bankrate, credit cards are already charging an average of 17.42%. Soon, credit card interest rates could eclipse the all-time record of 17.87%.
The problem is credit card debt is very expensive.
For instance, if a consumer puts $1,000 in back-to-school expenses on a credit card and only makes the minimum payments at 17.42%, the consumer will be in debt for about three years and will incur about $300 in interest charges, according to Rossman.
According to TransUnion, the average credit card balance is already $5,270.
Read the full article here