Australians Intend to Spend $30 Billion This Christmas

Despite the cost of living crisis, Australians intend to spend $30 billion this Christmas on presents and festivities, which is about 10% more than they did in 2022. This averages out to about $1,479 per person, up from $1,361 in 2022, according to Finder’s Consumer Sentiment Tracker survey conducted last month.

The survey asked people aged over 18 in Australia’s five biggest states how much they intended to spend across the key categories of presents, food, alcohol, eating out and travel this Christmas. Victorians have the biggest spending budgets of $1,765 per person, followed by those in New South Wales at $1,657. The lowest spending state will be Queensland at $1,067 per person. Among the generational age groups, millennials intend to spend the most this Christmas at $1,924 per person on average, and Gen Z plans to spend the least at $1,023 per person.

The biggest budget category is airfares with an estimated $533 average spend per person. Residents of New South Wales will spend the most at $710 per person, while those living in one of Australia’s most traditionally popular holiday destinations – Queensland – will spend the least at $316 per person. Gen Y Australians will be the biggest travel spenders this season by a large margin, spending $898 per person for flights compared to an average of $440 or less across all other generational age brackets.

Domestic airfares hit a historical high in December 2022. They have since fallen but remain above pre-pandemic levels. A report released by the Australian Competition and Consumer Commission (ACCC) in June found that prices were coming down due to lower jet fuel costs, an easing in post-COVID travel demand and “the rising cost of living becoming a greater concern for consumers”.

But on a long-term view, the ACCC says a lack of industry competition means airfares will remain relatively expensive in Australia. “Without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services, and invest in systems to provide high levels of customer service, ACCC Chair Gina Cass-Gottlieb said. “Rex’s expansion onto major intercity routes and Bonza’s launch have been positive developments for competition, but their share of the market is small and there are barriers to growth.”

After flights, the next most expensive Christmas category was presents, with Australians planning to spend an average of $373. Among the remaining categories, Australians will spend an average of $249 on food, $192 on alcohol and $133 on dining out. Baby boomers are planning the booziest Christmas with an average alcohol spend of $524 per person, which is vastly higher than all other age groups who intend to spend $110 or less.

Many Australians say they are trying to rein in their spending by planning their Christmas celebrations early. The survey found 26% of respondents planned to take advantage of Black Friday sales and 25% will buy food and presents early to help control their spending. Almost one in five Aussies say they will implement a gift-giving limit, while 8% plan to make gifts and 7% plan to re-gift unwanted presents. Some families are giving up on gifts altogether, with 6% saying they’ve agreed to a present-free Christmas this year.

Worrying about the cost of living is causing accelerated ageing, household arguments and creating significant stress, according to new research. More than half of Australians say they have experienced personal setbacks due to financial strain over the past year. Almost 20 percent say that have suffered a stress-related illness, 33 percent have lost sleep and almost one in five are seeing signs of early ageing.

Household hostility is also rising, with 19 percent of Australians admitting they have argued with their partners about money, and a further one in 10 have argued with family and friends.

The Finder survey of 1,070 Australians reveals women are bearing the brunt of financial stress, with 62 percent reporting they have worried about money compared to 42 percent of men.

Younger Australians are struggling the most, with almost 7 in 10 Gen Z respondents reporting financial strain compared to 58 percent of Gen Xers and 24 percent of baby boomers.

The impact of cost-of-living pressures among different age groups and income levels is reflected in new data from the Australian Bureau of Statistics (ABS). The selected living cost indexes show employee households are under more strain from inflation, with the CPI measure for this population group at 6.5 percent today compared to the official overall CPI figure of just 3.6 percent.

The discrepancy is due to higher mortgage interest payments – which make up a higher proportion of expenditure for employee households — as well as an increase in primary and secondary school fees, and the indexation of tertiary education fees at the start of the year. The official CPI does not include mortgage payments, so the living cost indexes provide a more accurate picture of how rising interest rates are impacting households with mortgages today.

The inflation rate is much lower for older Australians, who have often paid off their mortgages. The inflation rate on living expenses for age pensioner households is below the official CPI level at 3.3 percent, and it’s only slightly higher at 3.4 percent for self-funded retirees.

Graham Cooke, head of consumer research at Finder, said that despite cooling inflation, Australians were still under significant financial pressure.

“This can be seen in Finder’s Cost of Living Pressure Gauge, which has been hovering in the extreme range for the past year and a half,” Mr Cooke said. The gauge returned a reading of 78 percent in March this year compared to 47 percent in March 2021, when inflation was 1.1 percent and the Reserve Bank’s official cash rate was 0.1 percent.

Interestingly, Australians’ cash savings are higher today than they were in 2021, likely reflecting stimulus payments received and saved during the pandemic. The Reserve Bank has cited pandemic savings as a factor in keeping mortgage arrears low despite much higher interest rates. The Finder research shows Australians have an average of $37,206 in cash savings today, up from $24,928 two years ago.

“Money concerns can cause problems in your everyday life and snowball quickly if you don’t get them under control,” Mr Cooke said. “Building financial resilience is as vital as ever as costs continue to rise. Pay close attention to where your money is going so you keep impulse spending to a minimum, and don’t overspend.”

Australians appear to be heeding this advice, with the latest ABS retail figures showing seven straight quarters of declining per capita spending. “Per capita volumes show retail turnover after the effects of inflation and population growth have been accounted for,” explained Ben Dorber, ABS head of retail statistics. “Following an unprecedented seven straight falls, it is very clear how much consumers have pulled back on spending in response to cost of living pressures over the past two years.”

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