Spending Cutbacks Widen Generational Gap

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By Published On: May 30, 20240 Comments

New research reveals young Australians are cutting back on both essentials and discretionary spending as the cost of living crunch increases.

New research from Commonwealth Bank of Australia and data science and artificial intelligence company Quantium sampling the spending habits of over seven million customers has revealed that younger Australians in their mid-to-late-twenties have pulled back on their spend more than any other age group, while those over 65 continue to spend above the rate of inflation.

According to the latest CommBank iQ Cost of Living Insights Report, those aged 25-29 have reduced their spend by 3.5 percent compared to last year. When considering inflation, their consumption has shrunk more than 7 percent compared to May 2023. 

These younger consumers not only decreased their budget for discretionary items (-3.8 percent), but also on essential items (-3.1 percent). 

“Compared to the national experience, where most people have had to increase their spend on essentials, we are seeing the opposite trend amongst those in their twenties, with essential spending falling at a similar rate as discretionary,” said CommBank iQ Head of Innovation and Analytics Wade Tubman.

“These cuts include a 10 percent drop in health insurance, a 7 percent drop in utilities and a 4 percent decrease in spending at the supermarket. This highlights the difficult choices people in this age bracket are making, with some having to make larger lifestyle changes like foregoing their health insurance altogether. The decrease in utilities spending could also suggest young Aussies are moving back in with parents or into shared accommodation to split costs.”

“Many Australians are having to allocate more of their wallet to essential living expenses, rather than other areas where they may prefer to direct their spending. The cost-of-living initiatives announced in the Federal Budget, for example the energy bill rebate, reflect the increased spending by Australians on essential items like energy,” Mr Tubman said.

Overall, Australia’s discretionary spend increased by just 1.4 percent, led by continued growth by those Australians over 60.

“The wide gap in these patterns across age groups continues to persist, with Australians in the 60 and older age bracket spending above inflation, especially on activities like travel, which is up 11 percent, general retail up 9 percent and eating out, up 7 percent,” Mr Tubman said.

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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