Australians aged 30-34 and people renting their homes are feeling the most pressure from the rising cost of living. Spending on essential items is barely growing in line with inflation, according to CommBank iQ. Australian consumers are being thrifty in areas of everyday expenditure to prioritise on experiences. Notably, travel and accommodation spend is up 39% in January-March on the same period last year.
CommBank iQ is a joint venture between Commonwealth Bank of Australia and data science and AI company The Quantium Group.
CommBank iQ supports leading brands across the retail, energy, insurance, telco and property sectors. Specifically, it provides powerful data insights that support faster, more robust decision making in response to changes in consumer spending. It uses aggregated and de-identified payments data from 7 million CBA customers, Australia’s largest consumer payments data set.
This is then unlocked by analytics and artificial intelligence to track spending trends.
Australian expenditure: continued Covid rebound
“We’re responding to the increased cost of living in diverse and sometimes unexpected ways,” said CommBank iQ Head of Innovation and Analytics Wade Tubman.
“What we’re seeing is a continued Covid rebound effect. Consumers are catching up on the experiences that they missed out on during the pandemic. It seems counter-intuitive that at a time of increased cost of living pressures, consumers are boosting their discretionary spending.”
The report reveals a sharp divide in spending patterns according to age group. Older Australians are increasing their expenditure while younger customers are cutting back. Annual spending by those aged over 35 has increased by 7.7%. This is almost double the 3.4% in spending by those under 35.
Australians aged 25-29 show largest reduction in spending
18–24-year-old Australians have sustained their spending in real terms with many still living with their parents. Young people are choosing to go out less, although their average spend on these occasions has increased.
The report’s ‘Cost of Living Pressure Indicator’ measures changes in an individual’s total and discretionary spending. This has risen sharply and is positioned to increase further.
“Our Cost-of-Living Pressure Indicator shows renters are experiencing more pressure than homeowners in general. Despite the increased financial burden on some mortgage holders, a little under half of all homeowners are mortgage-free. One-third of those with a mortgage have savings buffers of two years or more,” added Tubman.
Year-on-year spending changes by age group: source: CommBank iQ