Friday, June 21, 2024

Spending gap widens between age groups

Younger Australians in their mid-to-late-twenties have pulled back on spending 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.

Youthful (spending) decline

Those aged 25-29 have reduced spending by 3.5 per cent compared to last year. They’re also the only age group to cut back on both essential and discretionary expenses. While most Australians have reallocated their budgets to cover the increased costs of essential items, like insurance, medical and supermarkets spending, consumers aged 25-29 decreased spending on both essentials (-3.1 per cent) and discretionary (-3.8 per cent) items.

“Compared to the national experience, where most people have had to increase spending 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 per cent drop in health insurance, a 7 per cent drop in utilities and a 4 per cent 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.”

National trends

Nationally, spending increased by 2.5 per cent, with essentials increasing by 3.6 per cent. Consumers clocked up an average of $1,472 per month on essentials, led by increased spend on insurance (+8 per cent), utilities (+6 per cent), pharmacies (+6 per cent) and supermarkets (+5 per cent).

Discretionary spending increased by just 1.4 per cent, led by continued growth in spending by those Australians over 60.

“The wide gap in spending 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 per cent, general retail up 9 per cent and eating out, up 7 per cent,” Mr Tubman said.

Across the country, regional Australia continues to hold up better than metro areas with a 3 per cent annual uplift in spending, compared to 2.3 per cent. Consumers in regional areas more than doubled their discretionary spending compared to those living in metro areas (2.4 per cent versus 1 per cent).
On a state-by-state basis, spending was most resilient in Queensland (+3.3 per cent) closely followed by the Australian Capital Territory at 3.1 per cent and South Australia at 2.9 per cent.
CommBank iQ is a joint venture between Commonwealth Bank of Australia and data science and artificial intelligence company Quantium, which uses de-identified payments data from approximately 7 million CBA customers –– to track spending trends.

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