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
3 min
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.
From making unpopular decisions to learning when to listen, leaders from five businesses reveal what nobody prepared them for — and how running a company has challenged their expectations.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
Technology and semiconductor shares fell sharply as investors questioned the debt financing the AI infrastructure boom and confronted higher rates and Chinese competition.
4 minA sharp technology sell-off has exposed a new anxiety on global markets: whether the enormous borrowing behind the artificial-intelligence infrastructure boom can generate sufficient returns as interest rates rise and Chinese competition intensifies.
The artificial-intelligence investment boom has powered technology shares, semiconductor manufacturers and data-centre operators to extraordinary heights. Last week, investors were given a reminder that much of this expansion is being built with borrowed money.
The technology-heavy Nasdaq Composite fell 4.5 per cent over the week ended October 16, its weakest performance since late June. Semiconductor shares suffered an even deeper correction, with the Philadelphia Semiconductor Index losing about 11.4 per cent.
The selling spread quickly through global markets. Micron Technology fell 14.6 per cent over the week, while South Korea’s Samsung Electronics and SK Hynix dropped approximately 18 per cent and 24 per cent respectively.
This was more than a routine bout of profit-taking. Investors were reassessing three interconnected risks: higher interest rates, the rapidly expanding debt burden attached to AI infrastructure and the prospect of stronger competition from Chinese memory-chip manufacturers.
The debt behind the AI build-out
Artificial intelligence requires a physical infrastructure network of enormous scale. Data centres must be built, advanced processors purchased, power supplies secured and cooling systems installed before customers begin generating meaningful revenue from them.
Technology companies are increasingly supplementing their own cash with corporate bonds, syndicated loans, equipment leases, private credit and project-level financing.
JPMorgan describes the emerging funding model as a combination of conventional corporate borrowing and project finance tied to individual data-centre assets. In Australia, the Reserve Bank estimates that syndicated loans accounted for approximately three-quarters of data-centre financing during 2025 and 2026 to date.
The numbers are becoming large enough to affect broader credit markets. The Federal Reserve Bank of Dallas has cited Wall Street estimates suggesting AI-related investment-grade bond issuance could approach US$300 billion in 2026 alone.
That borrowing is not automatically problematic. Debt can be an efficient way to finance long-lived infrastructure when future revenue is sufficiently predictable. The concern is that AI technology, customer demand and computing economics are changing much faster than the repayment schedules attached to the assets.
A data centre financed today may carry debt for years. Investors must therefore make assumptions about future utilisation rates, electricity prices, chip performance, customer concentration and the amount businesses will ultimately pay for AI computing.
When interest rates rise, those assumptions become less forgiving.
Inflation changes the calculation
September’s US inflation data intensified the pressure. Consumer prices increased 3.7 per cent over the year, ahead of market expectations and up from 3.4 per cent in August.
The hotter reading reduced confidence that interest rates would fall quickly and pushed bond yields higher. That matters particularly for companies whose valuations depend on profits expected well into the future, as well as highly leveraged infrastructure operators that may need to refinance.
CoreWeave has emerged as a closely watched test case. The specialist cloud-computing company has accumulated substantial debt and lease obligations to build AI capacity, while relying on a concentrated group of large technology customers.
Its shares fell sharply during the sell-off, while the cost of insuring its debt against default climbed. CoreWeave has argued that its contracted backlog more than covers its obligations and that financial markets do not always understand its business model. Nevertheless, its securities have become a proxy for investor confidence in debt-funded AI infrastructure.
Oracle, another major investor in AI computing capacity, fell 8.8 per cent in Friday trading, while CoreWeave dropped 15.5 per cent.
The question is shifting from how much AI infrastructure can be built to how profitably it can be operated.
China adds another source of pressure
Interest rates were not the only catalyst. Reports of advances by Chinese memory-chip producer ChangXin Memory Technologies raised concerns that lower-cost Chinese products could increase competition across the global semiconductor industry.
Memory chips are essential to AI systems, but the industry is historically cyclical. Periods of tight supply and high pricing can encourage rapid investment, eventually producing oversupply and falling margins.
The prospect of a well-funded Chinese competitor expanding its technological capabilities unsettled investors in Samsung, SK Hynix and Micron. It also demonstrated that AI-related demand does not insulate chipmakers from conventional competitive pressures.
That combination—slower rate cuts, more expensive financing and potentially cheaper supply—challenged the assumption that every company exposed to AI would enjoy continually expanding margins.
A reset rather than the end of the boom
The sell-off does not establish that the AI boom is ending. Demand for computing power remains strong, the largest technology companies continue to generate formidable cash flows and many infrastructure projects are backed by long-term customer contracts.
What has changed is the market’s willingness to overlook the price and financing structure of that growth.
The most resilient companies are likely to be those able to fund investment from operating cash flow, secure long-duration customers and demonstrate that new capacity will earn returns comfortably above its financing costs.
More speculative operators may face greater scrutiny, particularly where debt is expensive, customers are concentrated or expected revenue depends on demand that has not yet materialised.
For Australian investors, the lesson extends beyond US technology shares. Local data-centre operators, infrastructure funds, electricity suppliers and property groups are increasingly exposed to the same investment cycle.
Artificial intelligence may remain one of the defining growth themes of the decade. But last week’s correction showed that enthusiasm for the technology does not eliminate financial discipline.
The next stage of the AI boom will be judged not only by computing power, model performance or demand for chips, but by something more traditional: whether the assets being financed can generate enough cash to repay the money borrowed to build them.
Fact box
Nasdaq Composite: Down 4.5 per cent for the week ended October 16, 2026
Philadelphia Semiconductor Index: Down approximately 11.4 per cent
Micron Technology: Down approximately 14.6 per cent
Samsung Electronics: Down approximately 18 per cent
SK Hynix: Down approximately 24 per cent
US September inflation: 3.7 per cent annually
Estimated 2026 AI-related investment-grade issuance: Approximately US$300 billion
Records keep falling in 2025 as harbourfront, beachfront and blue-chip estates crowd the top of the market.
Australia’s market is on the move again, and not always where you’d expect. We’ve found the surprise suburbs where prices are climbing fastest.
