Shopping for back-to-school essentials, such as clothes, shoes and electronics, will be a bigger struggle for families this year who are trying to manage their household budgets with less disposable incomes because of inflation.

Back-to-school spending by parents with children in grades K-12 is expected to decrease 10% this year over last year to $597 per student, according to a new forecast from Deloitte on Wednesday. The last time Deloitte expected a decline in back-to-school spending was in 2014.

Although US consumer spending has remained strong, even as inflation has taken a bite out of discretionary purchases, the economy is starting to show cracks. Retailers, including Target and Home Depot, have reduced their profit and sales outlooks in recent months as Americans start to hold back on their discretionary purchases.

The report said spending on clothing is expected to fall 14% year-over-year and technology-related purchases are forecast to decline 13%; in contrast, purchases of school supplies are expected to be up 20% compared to last year.

Among parents spending less, 51% attributed the pullback to reduced disposable income (up from 45% in 2022), while 75% of those spending more said it was because of increased prices (up from 60% in 2022).

"Parents are likely to be strategic about their spending to help ensure children are set up for success at the start of the school year by renewing school supplies but perhaps holding off on new clothing until needed," Nick Handrinos, Deloitte's head of US retail and consumer products division, said in the report.

"It's not all bad news for retailers with many parents willing to splurge on certain items to treat their children, which may provide an opportunity for retailers," he said.

Discount, online and dollar stores will be heavily favored by deal seekers. Also, as interest rates go up, more families plan to pay for their school-related buys with cash or debit cards this year (77%, up from 72% in 2022) versus credit cards, the report said.

The Deloitte survey was conducted online between May 26 and June 1, 2023, and polled 1,212 parents with at least one child attending school in grades K-12 this fall.