Gen-Z Australians slash spending, while baby boomers splurge
AUSTRALIANS in their mid-to-late 20s are cutting back on spending to cope with rising living costs, while those aged over 65 are consuming at a rate faster than inflation, highlighting the nation’s increased intergenerational inequality.
People aged 25 to 29 reduced spending by 3.5 per cent in the first three months of 2024 compared with a year earlier, Commonwealth Bank of Australia, the nation’s largest lender, said in a report on Thursday (May 23). It analysed the transactions of roughly seven million people and found that this young cohort was the only one to cut back on both essential and discretionary expenses.
“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,” said CommBank iQ Head of Innovation and Analytics Wade Tubman. “The decrease in utilities spending could also suggest young Aussies are moving back in with parents or into shared accommodation to split costs.”
Australians in the older age bracket are spending above the rate of inflation, especially on activities such as travel, up 11 per cent, general retail, 9 per cent and eating out, 7 per cent, the data showed. Australia’s annual CPI came in at 3.6 per cent in the first quarter.
Housing expenses such as mortgages and rent were not included in the analysis.
The Reserve Bank of Australia raised interest rates 13 times between May 2022 and November 2023 to try to slow the economy and pull down inflation. But that’s delivered a steady increase in interest income for older Australians, who went from receiving virtually nothing on their savings to pocketing the highest returns in about 12 years.
Public policies such as housing tax concessions also tend to benefit older Australians.
Younger Australians, in contrast, are often stuck in insecure work and face soaring costs of rental accommodation, leaving them in a precarious financial position. The government is trying to ease some of that burden, with energy and rent relief announced in this month’s budget. BLOOMBERG
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