Younger Australians cutting back on essentials due to cost of living

Many Australians over 60 have spent more on travel and dining out in the last year, while people in their mid-to-late 20s have pulled back on their spending, new research suggests.

Australians aged 25 to 29 have cut back on their spending by 3.5 per cent in the last 12 months, with sacrifices made on both essential and discretionary expenses, according to the Commonwealth Bank.

Meanwhile, most other age groups have reallocated their budgets to cover the increased costs of essential items including insurance, medical and supermarket spending.

Australians in their mid-to-late 20s have cut back on their spending by 3.5 per cent in the last 12 months.

"Where most people have had to increase spending on essentials, we are seeing the opposite trend amongst those in their 20s, with essential spending falling at a similar rate as discretionary," head of innovation and analytics Wade Tubman said.

"These cuts include a 10 per cent drop in health insurance, a seven per cent drop in utilities and a four per cent decrease in spending at the supermarket.

"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 research has indicated a trend in people over 60 spending above inflation.

In this age group, spending on travel was up 11 per cent, general retail increased by nine per cent and eating out was up seven per sent.

Across Australia, spending increased by 2.5 per cent with essential spending rising by 3.6 per cent.

People spent an average of $1472 per month on essentials including insurance, utilities, pharmacies and groceries.

Discretionary spending increased by just 1.4 per cent, which was led by continued growth in spending by those Australians over 60.