Young Australians cut back on essentials while Baby Boomers spend freely

Younger Australians in their mid-to-late-twenties have cut back on spending more than any other age group, while Baby Boomers aged over 65 years continue to spend above inflation, according to the latest CommBank iQ Cost of Living Insights Report. Those aged 25-29 years have reduced spending by 3.5 percent compared to last year, and they’re the only age group to have cut back on both essential and discretionary expenses.

CommBank and artificial intelligence company Quantium use de-identified payments data from CBA’s seven million customers every quarter to evaluate how Australians are spending their money and responding to today’s higher costs of living. One of the strongest trends is Australians reallocating more of their funds to cover essential expenses such as groceries and insurance and cutting back on discretionary items like apparel.

However, young Australians aged 25 to 29 are the only age cohort cutting back on essentials as well as discretionary items. During the March quarter, they spent 10 percent less on health insurance than they did in the March 2023 quarter, with CommBank saying this was the result of a 12 percent reduction in the number of people having coverage. They spent 7 percent less on utilities, 4 percent less on supermarket groceries and 3 percent less on insurance. The national trend encompassing all age groups was the opposite. Examples include a 3 percent increase in spending on groceries and an 8 percent increase on insurance.

“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 CommBank iQ Head of Innovation and Analytics Wade Tubman.

“This highlights the difficult choices people in this age bracket are making, with some having to make larger lifestyle changes like foregoing their health insurance altogether. The decrease in utilities spending could also suggest young Aussies are moving back in with parents or into shared accommodation to split costs.”

The average Australian is spending 3.6 percent more on essentials at an average of $1,472 per month, led by an 8 percent increase on insurance, 5 percent on medical and pharmacy, and a 3 percent bump on utilities, supermarket groceries and transport.

“Many Australians are having to allocate more of their wallet to essential living expenses, rather than other areas where they may prefer to direct their spending. The cost-of-living initiatives announced in the Federal Budget, for example the energy bill rebate, reflect the increased spending by Australians on essential items like energy,” Mr Tubman said.

The data showed continued growth in spending among Baby Boomers. “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 percent, general retail up 9 percent and eating out, up 7 percent,” Mr Tubman said.

The data shows that the older Australians are, the more money they are spending. Those aged 75-plus are spending 6.5 percent more at $2,408 per month. Those aged 70-74 are spending 5.1 percent more at $2,762 per month. Those aged 65-69 are spending 4.4 percent more at $3,253 per month and those aged 60-64 are spending 3.7 percent more at $3,331 per month. At the other end of the scale, Australians aged 25-29 are spending 3.5 percent less at $2,099 per month and those aged 30-34 are spending 0.6 percent less at $2,568 per month.

Australians living in regional areas are holding up better amid today’s high cost of living.

“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.

Spending was most resilient in Queensland, the ACT and South Australia. The data shows per capita spending on travel and other discretionaries in Queensland was higher than the national average. Interestingly, both Queensland and South Australia have the fastest-growing retiree populations in Australia. Data just released by the Bureau of Statistics shows Queensland saw the highest increase in retiree residents between FY21 and FY23while South Australia saw the largest rise in the proportion of its population that is retired.

The boom in casual footware ushered in by the pandemic has ended, a potential problem for companies such as Adidas that benefited from the shift to less formal clothing, Bank of America says.

The casual footwear business has been on the ropes since mid-2023 as people began returning to office.

Analyst Thierry Cota wrote that while most downcycles have lasted one to two years over the past two decades or so, the current one is different.

It “shows no sign of abating” and there is “no turning point in sight,” he said.

Adidas and Nike alone account for almost 60% of revenue in the casual footwear industry, Cota estimated, so the sector’s slower growth could be especially painful for them as opposed to brands that have a stronger performance-shoe segment. Adidas may just have it worse than Nike.

Cota downgraded Adidas stock to Underperform from Buy on Tuesday and slashed his target for the stock price to €160 (about $187) from €213. He doesn’t have a rating for Nike stock.

Shares of Adidas listed on the German stock exchange fell 4.5% Tuesday to €162.25. Nike stock was down 1.2%.

Adidas didn’t immediately respond to a request for comment.

Cota sees trouble for Adidas both in the short and long term.

Adidas’ lifestyle segment, which includes the Gazelles and Sambas brands, has been one of the company’s fastest-growing business, but there are signs growth is waning.

Lifestyle sales increased at a 10% annual pace in Adidas’ third quarter, down from 13% in the second quarter.

The analyst now predicts Adidas’ organic sales will grow by a 5% annual rate starting in 2027, down from his prior forecast of 7.5%.

The slower revenue growth will likewise weigh on profitability, Cota said, predicting that margins on earnings before interest and taxes will decline back toward the company’s long-term average after several quarters of outperforming. That could result in a cut to earnings per share.

Adidas stock had a rough 2025. Shares shed 33% in the past 12 months, weighed down by investor concerns over how tariffs, slowing demand, and increased competition would affect revenue growth.

Nike stock fell 9% throughout the period, reflecting both the company’s struggles with demand and optimism over a turnaround plan CEO Elliott Hill rolled out in late 2024.

Investors’ confidence has faded following Nike’s December earnings report, which suggested that a sustained recovery is still several quarters away. Just how many remains anyone’s guess.

But if Adidas’ challenges continue, as Cota believes they will, it could open up some space for Nike to claw back any market share it lost to its rival.

Investors should keep in mind, however, that the field has grown increasingly crowded in the past five years. Upstarts such as On Holding and Hoka also present a formidable challenge to the sector’s legacy brands.

Shares of On and Deckers Outdoor , Hoka’s parent company, fell 11% and 48%, respectively, in 2025, but analysts are upbeat about both companies’ fundamentals as the new year begins.

The battle of the sneakers is just getting started.

Young Australians cut back on essentials while Baby Boomers spend freely

The spending gap between young and old Australians is growing, a new report reveals

The pandemic-fuelled love affair with casual footwear is fading, with Bank of America warning the downturn shows no sign of easing.