LAREDO, Texas (KGNS) – Back-to-school shopping is traditionally a big deal, but many Americans are finding themselves spending more than they have in the past.
Their mother, Montserrat Pla, noticed that this year their expenses were higher than usual. “What you can do is look at what you have and see what you can reuse, which is what we did. Another thing is to look for deals on school supplies and, first and foremost, save throughout the year so that you have enough money left when it comes time to shop,” Pla said.
She’s not alone: Laredo resident Juana Alvarez has also felt the effects of rising prices. “Everything is going up in price. You could say it’s doubled in price. It has a big impact on us because it’s reflected in our daily expenses,” Alvarez said.
According to Amit Ghosh, a professor of economics at Texas A&M International University (TAMIU), the rise in prices can be partially traced back to the pandemic. “There was a disruption in the supply of raw materials and intermediate goods, which led to what we call supply chain bottlenecks and supply chain issues, as the supply of raw materials and intermediate goods went down and prices of goods went up. The idea that 2% is an ideal inflation rate was around even before the pandemic,” Ghosh explained.
Ghosh highlighted that costs are rising due to a combination of supply chain issues and increased demand. He noted that these costs become more pronounced when wages fail to keep up with inflation. “Real incomes, i.e. the purchasing power of the dollars we earn, are falling. At such times, people face challenges and have to prioritise. They may have to cut spending on certain activities when they would like to prioritise spending on more essential needs,” Ghosh said.
The dollar strengthened further because inflation was low before the pandemic. Ghosh added that inflation has been gradually declining over the past two years and he expects it to continue to decline. While it is unclear whether prices will return to pre-pandemic levels, lower inflation will translate into lower costs, which will come as a welcome relief to many.
Ghosh also suggested that consumers could adapt to higher prices by switching to generic brands where possible.
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