American parents foresee higher back-to-school expenses due to rising inflation.
According to a survey from accounting firm KPMG, consumers predict a 9% year-over-year increase in their back-to-school spend. Last year, they anticipated spending $247; this year, they anticipate $268.
The firm’s report detailed:
A leading reason for increased spending is the expectation that items will be more expensive this back-to-school season. Among respondents planning to spend more per child, 39 percent believe things will cost more in 2021.
U.S. inflation is indeed on the rise: According to KPMG economic analysis, many products are seeing a spike in prices, driven by the combination of supply shocks to U.S. manufacturing suppliers and strong demand for goods, including certain school shopping categories. Clothing prices, for example, are showing a 1.9 percent rise in year-over-year terms.
The sudden and widespread shift to remote schooling in the end of the 2019 school year, and its continuation into 2020, meant many parents were competing to scoop up high-demand, limited inventory items like computers and desks. Global supply chain bottlenecks in key sectors such as technology and furniture compounded the matter.
In May, the Consumer Price Index — a metric used by the Bureau of Labor Statistics to track price levels for the average American family — saw a year-over-year increase of 5%. The agency’s findings imply that the United States is witnessing its highest level of inflation since the Great Recession.
Core CPI — which factors out food and energy costs — saw its largest year-over-year hike since 1992.
A recent survey among members of CNBC’s Global CFO Council revealed that one-third of American financial executives will raise prices if high inflation persists. Though most CFOs see high inflation as no more than a temporary phenomenon, none of the American CFOs taking the survey indicated that they are “very confident” or “somewhat confident” in the Federal Reserve’s ability to manage inflation. Indeed, nearly half said that they are “not at all confident.”
The Federal Reserve — the central bank of the United States — has not yet announced plans to taper its aggressive monetary stimulus. Last month, the Federal Open Market Committee increased its inflation projection for 2021 to 3.4% — a full percentage point higher than its previous forecast.
The Fed will continue to purchase $120 billion in bonds from the private market every month, despite a GDP growth projection of 7% for 2021.