'Travel, eating out, household goods': How the young are cutting back

An analysis of spending by seven million consumers by the Commonwealth Bank this week shows people aged 25-29 were the only group to reduce spending on both discretionary items and essentials including insurance, utilities and groceries in the year to March 31.

That age group reduced spending by 3.5 per cent despite CPI being 3.6 per cent.

People aged 30-34 also cut their spending in 2023, down 0.6 per cent.

CommBank IQ head of innovation and analytics Wade Tubman said the cutbacks for that age group were particularly acute for discretionary spending of "travel, clothes and household goods (sofas, computers, televisions) " each by about 10 per cent.

He said young adults were in the "formative years of their housing journey", thereby impacted most severely by rental price and interest rate hikes.

But Mr Tubman said there were "green shoots" on the horizon including tax cuts in July and interest rate cuts predicted within the next year.

At the other end of the spectrum Australians aged over 60 increased their overall spending at a rate greater than inflation, particularly in areas such as travel and eating out.

"These are experiences that they lost out of in Covid," said Mr Tubman. "Older people were slower to come out of Covid and back to travel and eating out."

For the over 60 age group travel was up 11 per cent, retail nine per cent and eating out up seven per cent.

Across the country, regional Australia continues to hold up better than metro areas with a three per cent annual uplift in spending, compared to 2.3 per cent. Consumers in regional areas more than doubled their discretionary spending compared to those living in metro areas (2.4 per cent versus one per cent).

"While spending in regional areas continues to outpace that of metro areas, this gap has narrowed when compared to previous quarters. This raises the question whether people in metro locations have downsized their wallets to adjust to higher prices, and what spending growth remains is now 'the new normal'," Mr Tubman said

Redbridge pollster Kos Samaras said the result would have an impact at the ballot box.

"Our economy is now structured in such a way that it rewards entrenched wealth and punishes younger Australians who can least afford it," he said.

"Politically we are seeing the consequences with the growth of the minor party vote and from our most recent research where only half of all young voters identify with any political party."