Australians over the age of 60 are spending above the rate of inflation on travel, retail and eating out according to the latest CommBank iQ Cost of Living Insights Report.

However, the cost-of-living crisis is hitting younger Australians in their mid-to-late-twenties hardest, who have pulled back on spending more than any other age group.

Discretionary spending in the March quarter increased by just 1.4%, led by continued growth in spending by those Australians over 60.

“The wide gap in spending patterns across age groups continues to persist, with Australians in the 60 and older age bracket spending above inflation, especially on activities like travel, which is up 11%, general retail up 9% and eating out, up 7%,” said CommBank iQ Head of Innovation and Analytics Wade Tubman.

Those aged 25-29 have reduced spending by 3.5% compared to last year, the only age group to cut back on both essential and discretionary expenses. When considering inflation, their consumption has shrunk more than 7% compared to May 2023. While most Australians have reallocated their budgets to cover the increased costs of essential items, like insurance, medical and supermarkets spending, consumers aged 25-29 decreased spending on both essentials (-3.1%) and discretionary (-3.8%) items.

“Compared to the national experience, where most people have had to increase spending on essentials, we are seeing the opposite trend amongst those in their twenties, with essential spending falling at a similar rate as discretionary,” said Tubman.

Across the country, regional Australia continues to hold up better than metro areas with a 3% annual uplift in spending, compared to 2.3%. Consumers in regional areas more than doubled their discretionary spending compared to those living in metro areas (2.4% versus 1%).

“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’,” Tubman said.

On a state-by-state basis, spending was most resilient in Queensland (+3.3%) closely followed by the Australian Capital Territory at 3.1% and South Australia at 2.9%.

“In the Sunshine State, discretionary spend per capita on things like travel was higher than the nationwide average. While further south, Victorians have tended to reduce their spending more significantly than others when it came to homewares and apparel and didn’t increase spend as much on travel, leisure and eating out,” Tubman said.