The latest CommBank iQ Cost of Living Insights Report revealed that younger Australians are feeling the brunt of rising costs, with those under 40 cutting back on spending across both essential and discretionary categories.
Overall consumer spending rose by just 1.5% year-on-year, trailing inflation. However, those aged 18–29 reduced spending by 2%, while 30–39-year-olds scaled back by 1.1% on essentials and 1.0% on discretionary purchases.
By contrast, older Australians increased their spending, with those aged 60–69 spending 3.9% more, and over-70s boosting spending by 7.7%, reflecting a generational divide in spending power.
Spending on essential items grew by only 1.7% in the past year, nearly halving the previous year’s growth rate. This slowdown stems from reductions in petrol prices (-6%) and utilities (-3%), though insurance (+10%), medical expenses (+7%), and education (+6%) saw notable increases.
Australians now spend nearly equal amounts on essentials and discretionary items, averaging $1,383 and $1,379 per capita per month, respectively.
“Lower petrol prices and government energy relief programs have eased the pressure on essential spending,” said Wade Tubman (pictured above), CommBank iQ’s head of innovation and analytics.
“However, Australians under 40 continue to feel significant cost-of-living pressures, highlighting a broad swathe of the population still cutting back.”
Discretionary spending growth reflects a focus on value and convenience. Online marketplaces (+20%), food delivery (+6%), streaming services (+13%), and discount stores (+6%) saw notable increases.
“Cost-conscious Australians are making trade-offs,” Tubman said. “Increases in food delivery and streaming suggest people are swapping dining out for at-home treats, while opting for discount online purchases to stretch their budgets further.”
Regional Australia continues to outspend metro areas, with growth at 2.2% compared to 1.3%. Western Australia (3.1%) and Queensland (2.9%) led state spending, driven by leisure and travel. Victoria saw the weakest growth at 0.4%, as households exercised restraint.
“Queensland’s optimism, buoyed by state government concessions, contrasts with Victoria’s cautious spending, which prioritises essentials over non-essentials,” Tubman said.
For more information, read the CommBank media release or download the latest CommBank iQ Cost of Living Insights.
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