Spending higher on school supplies is what American parents are likely to expect this back-to-school season, as prices of the items are on the rise.
“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,” according to a survey from accounting firm KPMG.
Here’s a detailed report from the Firm:
“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 at 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.”
The agency’s conclusions imply that the United States is experiencing its highest level of inflation since the Great Recession. 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%.
One-third of American financial executives foresee hiking their prices if costs continue to rise – revealed among members of CNBC’s Global CFO Council in the recent survey. Most CFOs see high inflation as no more than a temporary phenomenon and that American financial executives do not trust the Federal Reserve to manage inflation – as they are not “very confident” with them to handle it.
No announcement yet on plans to decrease its aggressive monetary stimulus from The Federal Reserve — the central bank of the United States. The Federal Open Market Committee dramatically hikes Inflation Projection for 2021 to 3.4% — an entire percentage point higher than its previous forecast.
Despite a GDP increase projection of 7% for 2021, The Federal Reserve will not stop in purchasing $120 billion in bonds from the private market every month.
Here’s an Excerpt from Federal Reserve reports:
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation having run persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well-anchored at 2 percent. The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved.”
Meanwhile, the Fed will continue promoting a near-zero interest rate and purchasing Treasury bonds:
“The Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time. In addition, the Federal Reserve will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.”
Sources: DailyWire, KPMG, FederalReserve