Australians are freeing up more of their wallet for discretionary purchases with a focus on value and convenience, according to the CommBank iQ Cost of Living Insights analysis.
Overall spending continues to trail inflation, up by just “1.5 per cent compared to the same time last year.”
Young Australians continue to feel the pinch more than any other age group with those aged “18–29 cutting back on spending by 2 per cent over the past year, with a notable decline in both essential (-2.3 per cent) and discretionary (-1.9 per cent) spending.”
During the last 12 months 30- to 39-year-olds have also recorded negative overall spending growth, with “a 1.1 per cent drop in essential spending and 1.0 per cent drop in discretionary categories.”
By contrast, those aged 60-69 increased spending by “3.9 per cent and over 70s by 7.7 per cent, underscoring the continued generational spending gap.”
Spending on the essentials has halved in the past year, down to “1.7 per cent, as the share of wallet between essential and discretionary spending is now nearly equal ($1,383 per capita per month vs $1,379). ”
The slowdown was driven by decreases in “petrol prices (down 6 per cent) and reduced utilities spending (down 3 per cent).”
Conversely, spending “on Insurance (+10 per cent), Medical and Pharmacies, (+7 per cent), and Education (+6 per cent) continued to rise.”
A 5 per cent increase in spending on the ‘General Retail’ category over the past year was driven by convenience and “cheaper alternatives, driven by increased spending on online marketplaces (+20 per cent).”
As mentioned in the detailed report, spending on “food delivery (+6 per cent), streaming services (+13 per cent), and discount stores (+6 per cent) also rose.”
The divide between metro and regional areas persists, “though it has not worsened.”
Regional Australia continues to outpace its metro counterparts, with spending growth “at 2.2 per cent compared to 1.3 per cent in metro areas.”
Despite both facing inflationary pressures, regional communities are showing signs of resilience likely due to “different cost structures and lifestyles, such as heightened property prices and rents in metro areas.”
On a state-by-state basis, Western Australia experienced the highest growth in spending at “3.1 per cent, driven by leisure and travel spending, followed by Queensland with 3.9 per cent growth.”
In contrast, Victoria reported the lowest spending growth at “0.4 per cent as households continue to exercise spending restraint.”
CommBank iQ is a JV between Commonwealth Bank of Australia and data science and artificial intelligence company Quantium, which uses de-identified payments data from “approximately 7 million CBA customers –– to track spending trends.”
CommBank iQ’s cost-of living analysis evaluates a range of metrics “that indicate changes in cost of living and the different ways Australians are responding.”
Most economic data is based on national averages – yet businesses “serve real people who face unique pressures and make individual choices.”
Understanding the variation in circumstances can help “inform strategic business decision-making.”
Many Australian households are finding it harder to deal with “current cost of living pressures.”
CommBank is supporting those who need help with a range of initiatives.
CommBank’s Cost of Living Support Hub provides a tools, tips, guidance to help customers navigate current cost of living pressures.
