A new report by CommBank iQ on changes in spending behaviour in response to inflation, interest rate rises and rent increases, shows that Australians aged 30-34 and people renting their homes are feeling the most pressure from the rising cost of living.

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CommBank iQ is a joint venture between Commonwealth Bank of Australia and data science and artificial intelligence company Quantium, which uses aggregated and de-identified payments data from 7 million CBA customers – Australia’s largest consumer payments data set – to track spending trends.

The Cost of Living Insights Report shows discretionary expenditure remains elevated post-Covid, while spending on essential items is barely growing in line with inflation. People are being thrifty in areas of everyday expenditure to prioritise on experiences, with travel and accommodation spending up 39 per cent in January-March on the same period last year.

“Putting our expenditure under the microscope shows we’re responding to the increased cost of living in diverse and sometimes unexpected ways,” comments the report’s author CommBank iQ Head of Innovation and Analytics Wade Tubman. 

“What we’re seeing is a continued Covid rebound effect, with consumers 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 choosing to boost their discretionary spending.”

The report reveals a sharp divide in spending patterns according to age group, with older Australians increasing their expenditure while younger customers are cutting back. Annual spending by those aged over 35 has increased by 7.7 per cent, almost double the 3.4 per cent increase in spending by those under 35.

Australians aged 25-29 show the largest reduction in expenditure, while 18-24 year olds 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’ – which measures changes in an individual’s total and discretionary spending – has risen sharply and is positioned to increase further. This is accompanied by heat maps showing how this pressure is being felt across different areas of Sydney and Melbourne.

“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 and a third of those with a mortgage have savings buffers of two years or more,” notes Mr Tubman.

CommBank iQ supports leading brands across the retail, energy, insurance, telco and property sectors by providing powerful data insights that support faster, more robust decision making in response to changes in consumer spending.

“Whenever there is uncertainty and volatility in the market, we see businesses increasingly seeking out comprehensive up-to-date analysis of customer behaviour and market movements from a trusted source. This is why bank transaction data is being increasingly relied upon by leading brands for their customer and market intelligence,” says CommBank iQ CEO Ben Ashton.

CommBank’s Cost of Living Support Hub provides a range of tools, tips and guidance to help our customers navigate current cost of living pressures.

Infographic showing essential share of wallet and discretionary share of wallet Changes in essential and discretionary spending
Infographic showing Q1 2023 vs Q1 2022 spend per capita change Year-on-year spending changes by age

About CommBank iQ

CommBank iQ is a joint venture between Commonwealth Bank of Australia ABN 48 123 123 124 (Commonwealth Bank) and The Quantium Group Pty Ltd, designed to give businesses and institutions the power of Australia’s largest and de-identified transaction banking dataset, unlocked by leading analytics and artificial intelligence. This unique partnership enables businesses and institutions to understand and predict the needs of Australians like never before. Visit: commbank.com.au/commbankiq

Go to CBA Newsroom for the latest news and announcements from Commonwealth Bank.