Australians aged 30-34 and renters are feeling the most pressure from the rising cost of living, according to a new CommBank iQ report.
The Cost of Living Insights Report by CommBank iQ, a joint venture between Commonwealth Bank and data science and artificial intelligence company Quantium, found that discretionary expenditure remained high post-COVID, while spending on essential items is barely growing in line with inflation.
The report uses bank transaction data to provide business customers with insights into changes in consumer spending.
People were spending prudently when it came to their everyday expenditures, so they could prioritise on experiences, with travel and accommodation spending up 39% in January-March on the same period last year.
“Putting our expenditure under the microscope shows we’re responding to the increased cost of living in diverse and sometimes unexpected ways,” said Wade Tubman (pictured above), the report’s author and CommBank iQ head of innovation and analytics.
“What we’re seeing is a continued COVID rebound effect, with consumers catching up on the experiences that they missed out on during the pandemic. It seems counterintuitive that at a time of increased cost-of-living pressures, consumers are choosing to boost their discretionary spending.”
The report revealed a sharp divide in spending patterns according to age group. Older Australians had increased their expenditure, while younger customers reduced their spending. Those aged over 35 were spending 7.7% more annually, nearly double the 3.4% rise in spending by those under 35.
Australians aged 25-29 had the largest reduction in expenditure, while 18-24-year-olds had sustained their spending in real terms, with many still living with their parents. Young people were opting to go out less, although their average spend on these occasions has lifted.
The report’s Cost of Living Pressure Indicator, which measures changes in an individual’s total and discretionary spending, has increased significantly and is tipped to rise further.
“Our Cost of Living Pressure Indicator shows renters are experiencing more pressure than homeowners in general,” Tubman said. “Despite the increased financial burden on some mortgage holders, a little under half of all homeowners are mortgage-free and a third of those with a mortgage have savings buffers of two years or more.”
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