Quicktake: Inflation weighs on back-to-school shoppers
Inflation, driven by gas prices, weighed on shoppers this year
With gas prices pumping up over the summer, the spending resiliency that has characterized shopper spending over the past couple of years was put to the test for back-to-school this year. Pre-season, forecasters were expecting shoppers to be focused on value and affordability to keep budgets in check.
Bread Financial’s proprietary research confirmed that while shoppers spent on back-to-school essentials, inflation and, more specifically, gas prices drove how they shopped and spent for the season. Half (49%) of BTS/BTC shoppers spent more this year, on par with 2025 (48%). Two in five (41%) spent the same this year compared to last (down from 44% in 2025), while 10% spent less, statistically consistent with 8% last year.
Most shoppers who spent more chalked it up to rising prices (61%). Overall, 90% reported that inflation impacted their back-to-school spending, up significantly from last year (86%)—and driven by middle and upper incomes (see below). Eight in ten (81%) pointed to gas prices as putting a dent in their purchase plans.
Inflation impacting back-to-school spending, by household income
Fewer shoppers felt that retailers were on their promotional A-game
Pinched by high prices, shoppers were less enthusiastic about the promotional environment this year with 71% reporting that they were satisfied or very satisfied with sales and discounts, dropping from 77% in 2025 (amid tariff concerns). Declines occurred across BTS (71%, from 77% LY) and BTC (72%, from 81% LY) shoppers.
Satisfaction declined even as shoppers turned to AI to uncover promotions. Finding deals, discounts, coupon codes or sales events was the top way shoppers leveraged AI (see below). Overall, 69% used AI in some way to assist with back-to-school shopping. Among these shoppers, 65% found the AI-powered assist to be extremely or very helpful.
Top ways shoppers used AI for a back-to-class assist
Inflation-weary shoppers trimmed the retailers they shopped for back-to-class
The top three ways shoppers offset rising gas prices were making fewer shopping trips overall (31%), shopping closer to home (27%) and combining back-to-class shopping with other errands (27%). As such, shoppers reduced the number of retailers they shopped for BTS/BTC this year. While shoppers were most likely to head to superstores (e.g., Walmart, Target) this year (61%), this declined from 69% last year. Except for discount/dollar stores (30% vs 27% LY), all other retailer formats in the top five declined as well (see right). On the channel front, fewer said they purchased from physical stores (65% vs 70% LY) as well as digital channels (73% vs 78% LY)—supporting the price-weary narrative and reducing the number of opportunities retailers had to close a sale.
Further, BTS/BTC shoppers’ top purchase categories teetered as well: supplies (76% vs 79% LY), apparel/shoes (64%, down significantly from 68% LY), personal care/beauty (44% vs 46% LY), books and other media (39%, down significantly from 43% LY) and electronics (32% vs 35% LY).
Top retailer formats shopped for BTS
Budget-minded shoppers favored debit cards, cash—relying less on credit cards
This year, shoppers seemed to lean into debit cards (67%, steady from LY) and cash (46%, up from 43% LY) to pay for purchases and avoid overspending. Bank-branded (23%) and retailer/store (22%) credit cards were other top payment methods, but usage of both decreased significantly YoY (see below). Among bank-branded cards, YoY declines were consistent across both BTS and BTC shoppers as well as income bands, indicating a broader pullback among back-to-class shoppers at large. Pay-over-time financing (e.g., BNPL, split pay) held YoY (at 21%), with BTC shoppers (27%) most likely to use this method of payment.
However, despite credit cards slipping as a payment method YoY, retailer/store cards still influenced retail destinations for BTS/BTC purchases. Two in five back-to-school shoppers (41%) specifically shopped with a retailer because they had their store credit card (PLCC or CBCC), statistically consistent with last year (44%). Additionally, more than a third (35%) shopped a retailer because it offered pay-over-time options, consistent with last year (34%) and rising significantly among BTC shoppers (45%).
Top payment methods for BTS purchases
Key takeaway: Looking ahead to the holiday season
Broadly, shoppers are showing signs of shifting their purchase strategies as they increasingly feel pressured by inflated prices, particularly at the pump. The spending resiliency characterizing shoppers over the past few years may be beginning to wane, which could create a tougher retail environment as we march toward the all-important holiday season.
Data sources: Bread Financial Back-to-School/College Hindsight surveys, 2026 (collected Sept 8-9, 2026) and 2025 (collected Sept 2-3, 2025)
Arrows/shading denote statistically significant changes YoY (95% confidence level)
About Bread Financial®
Bread Financial® (NYSE: BFH) is a tech-forward financial services company that provides simple, personalized payment, lending and saving solutions to millions of U.S. consumers. Our payment solutions deliver growth for some of the most recognized brands in travel & entertainment, health & beauty, technology, electronics, jewelry, home and specialty apparel through our co-brand and private label credit cards and pay-over-time products providing choice and value to our shared customers. Additionally, we offer Bread Financial general purpose credit cards and saving products that empower our customers and their passions for a better life.
Bread Financial proudly marks 30 years of success in 2026. To learn more about our global associates, our performance and our sustainability progress, visit breadfinancial.com or follow us on Instagram and LinkedIn.
