Baby boomers’ spending on luxury goods appears to be fueling Australia’s inflationary crisis as younger millennials are forced to cut back on essentials.
The Commonwealth Bank has analyzed the spending habits of its seven million customers, with the help of artificial intelligence company Quantium.
Older Australians take more holidays and eat out more often.
This is happening as millennials, struggling with higher rents and mortgage payments, are cutting their spending to face the worst cost-of-living crisis in a generation.
When it came to basic necessities and luxuries, baby boomers born between 1946 and 1964 spent significantly more than the seven percent annual inflation rate in the March quarter of 2023.
The oldest post-war boomers, age 75 and older, had seen their spending rise 13 percent in a year, compared with 11 percent for the 70 to 74 year olds.
Baby boomers’ spending on luxury goods appears to be fueling Australia’s inflationary crisis as younger millennials are forced to cut back on essentials (stock image of older people)
This gray-haired demographic is more likely to be living off their old age pension or retirement, as higher interest rates help those with significant bank savings.
The boomers of the VUT age also spent more than the consumer price index: spending in the 60 to 64 age group rose by 9.5 percent.
But millennials, born between 1981 and 1996, and the slightly older Generation X, born between 1965 and 1980, have been much more reserved.
The CommBank iQ Cost of Living Insights Report found that those aged 30 to 34 and renters suffered the most, with a vacancy rate of just 1.2 percent in the capital.
“While most groups have experienced some pressure, people aged 30 to 34 experience the greatest pain — they generate the highest pressure score for livelihood,” it said.
The 25 to 29 age group, who are more likely to rent in a very tight market, were so frugal that their spending rose just 0.1 percent over the year, despite inflation hitting a 32-year high last year. year reached 7.8 percent.
When it came to basic necessities and discretionary goods and services, baby boomers spent significantly more than the seven percent annual inflation rate in the March quarter of 2023. The oldest post-war boomers, age 75 and older, had seen their spending increase by 13 percent in a year , compared to 11 percent for those aged 70 to 74
“As Australians aged 25 to 29 move out and establish their lives with renting and home ownership, they are making the greatest savings compared to other age groups,” the report said.
The 40 to 44 age group, who are most likely to pay off a mortgage, had increased their spending by just five percent — well below inflation.
Wade Tubman, head of innovation and analytics at CommBank iQ – a joint venture between the Commonwealth Bank and Quantium – said the data clearly showed that tenants suffered more than home borrowers.
“Tenants are experiencing more pressure than homeowners in general,” he said.
Millennials, born between 1981 and 1996, and the slightly older Generation X, born between 1965 and 1980, are much more cautious with their spending. The CommBank iQ Cost of Living Insights Report found that those ages 30 to 34 and renters suffered the most (stock image)
‘Despite the increased financial burden for some mortgage holders, slightly less than half of all homeowners are mortgage-free and a third of mortgage holders have a savings buffer of two years or more.’
Australians spend a surprising amount on luxury, with spending on holidays and accommodation rising by 39 percent.
Spending on takeaway meals and dining out rose by 8.5 percent across all age groups, but it rose by 18 percent among the over-35s.
“It seems counterintuitive that at a time of mounting cost-of-living pressures, consumers are choosing to increase their discretionary spending,” the report said.
The youngest adults, aged 18 to 24, saw their spending rise by six percent over the year, but this group is more likely to live with their parents, so they no longer face significant rent increases.
Because many in this age group still live with their parents, they are less affected by rent and mortgage interest pressures, according to the report.