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The latest CommBank iQ Cost of Living Insights analysis revealed that overall spending has continued to lag behind inflation, rising just 1.5 per cent compared to the same time last year.
While spending remains constrained, the generational divide in spending behaviours is stark, with young Australians feeling the pressure more than their older counterparts.
Australians aged 18–29 reduced their overall spending by 2 per cent over the past year, with both essential (-2.3 per cent) and discretionary (-1.9 per cent) spending taking a hit.
Those aged 30–39 also recorded a decline in spending, down 1.1 per cent on essentials and 1.0 per cent on discretionary items. In contrast, those aged 60–69 increased spending by 3.9 per cent and the over-70s saw a significant 7.7 per cent rise, underscoring the generational spending gap.
Wade Tubman, CommBank iQ head of innovation and analytics, said: “Lower petrol prices and government energy relief programs have eased the pressure on essential spending and July’s income tax cuts have increased take-home pay for many Australians, however, there continues to be a discrepancy between the spending power of older and younger Australians.
“In fact, we’ve seen those all the way up to 40 years-old cut back on spending, highlighting the large swathe of the population feeling cost of living pressure.”
Regional Australia continues to outperform metro areas, with regional spending growing by 2.2 per cent, compared to just 1.3 per cent in metro areas.
This may be due to differing cost structures, such as higher property prices and rents in cities. On a state level, Western Australia experienced the highest growth in spending, up 3.1 per cent, driven by leisure and travel, followed by Queensland at 3.9 per cent growth.
Meanwhile, Victoria recorded the lowest growth at just 0.4 per cent, with households prioritising essential items over discretionary spending.
“Western Australia’s strong spending growth, particularly in regional areas, highlights the ongoing confidence of the state’s consumers,” Tubman said.
“Queensland’s discretionary spending growth indicates a more optimistic outlook among consumers, who were also likely buoyed by the state government’s energy concessions and discounted public transport initiatives.
“Spending by Victorians, on the other hand, reflects cautious consumer prioritising must-have essentials over discretionary items.”
While overall spending is down, Australians are still making some discretionary purchases, including spending on home services.
According to data from NAB, Australians appear less willing to cut back on services such as cleaners and gardeners.
Only one in five Australians have reduced their spending on home services in the past three months, compared to around one in two who have made broader cuts to non-essential spending, such as dining out, entertainment, and micro treats like coffee and cakes.
Home services are among the least likely spending cuts Australians are making, following only behind spending on children and pets. Despite this, those who did cut back on home services reported saving an average of $92 per month.
“Despite all the chat about cutting back and skipping takeaway coffees, coming home to a clean house at the end of the day still holds a high priority right now,” said NAB retail customer executive, Larna Manson.
“The phrase ‘time is money’ can be overdone but it’s clear we’re a nation serious about outsourcing home and garden care so we can use our weekends and evenings to relax and socialise.”
In a time of financial pressure, Australians continue to prioritise convenience and quality of life, even as they carefully manage spending across both essential and discretionary categories, according to NAB.
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