This week is Back-to-School Week at the Center for Economic Opportunity. We will feature commentary and analysis on affordability for families preparing for the new school year.
Inflation is finally on a downward trend after years of record-high rates during the Biden administration. With overall inflation now at 2.7% since July 2024, families will feel this relief when shopping for back-to-school. In states with sales tax-free holidays during the back-to-school season, families will see the savings compounded.
Although overall inflation is coming down, the individual items are what truly impact families’ budgets.
Inflation on school supplies, specifically computers, fell 1.8% from July 2024, also a greater decline than last month’s year-over-year decline (0.3%). Technology used in classrooms, such as calculators, is also seeing a significant decrease over last year, falling 8.8%.
Not only does lower inflation ease financial strain on larger purchases, but the new school year comes with lower prices on everyday items such as packed lunches, which fell 0.9%; gas, which fell 9.5%; and back-to-school clothes for girls, which fell 1.9%. Although these items are weighted relatively small in the overall inflation calculation, they make a big difference when families start budgeting for the school year.
The Consumer Price Index report for July showed many other bright spots as prices are falling or slowing across many categories. However, we did see prices start to pick up on some specific categories of goods, including back-to-school items like college textbooks, and kids’ footwear. The good news is that in the biggest categories of spending, like shelter and energy, prices are trending downward, which frees up household budgets for other expenses.
Relief Despite Rumored Tariff Effects
Many have heard that the tariffs put into effect by Trump would negatively impact Americans quickly, and that families would feel the burden of increased prices across the board almost immediately. However, those effects have yet to surface. Instead, we are seeing significant price decreases in school supplies, such as technology used in classrooms, which have fallen 8.8% since last year, as Trump‘s policies have made it more profitable to meet demand for back-to-school products at lower costs.
Notably, gas prices are nearly 10% lower than this time last year, making it more affordable for families to drive to school. This is especially important in states that emphasize school choice but lack the infrastructure to provide transportation to students who attend a school outside their assigned district.
Further, although elementary and high school tuition and fees did increase 3.1%, this rate of inflation is slowing down compared to the 4.8% increase seen in 2024. This lower rate of inflation, though still higher prices, enables more accessibility to school choice for families that would otherwise stay in a school that is not right for their child.
Bottom line
Overall inflation may be affecting different parts of the economy, but back-to-school budgets will find some relief this year as school starts up again.