The generational divide behind Australia's cost of living split | The Business | ABC News

Published: Sep 08, 2024 Duration: 00:04:12 Category: News & Politics

Tags : news australia ABC News finance abc CPI holiday economy inflation business news millennials finance news Gen Z Economic News Cost of Living mortgage Australia News interest rates Generations rates ski resort reserve bank boomers the business Commonwealth Bank CBA Gen zers RBA Nicki Hutley Matt Comyn Daniel Ziffer mt hotham paddy hoy school costs costs cutting back generational split

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[Music] in Victoria's High Country Baby Boomers like Murray and his wife are enjoying their ski holiday I'm 65 and Catherine's 62 yeah so and I want to ski until I'm 80 85 what they can't escape is the growing generational slide in living standards and spending the older people have the money to spend and the younger people are finding a bit tough and I would say that a lot of the younger people are trading on their parents for a lot longer than we traded on ours boomers born between 1946 and 1964 are more likely to have paid off their homes putting them in a good financial position while inflation Rising rents and interest rate fueled mortgage repayments have put younger Generations under considerable pressure it's just so hard for them with mortgages and the numbers that they've got now compared to when we had our mortgages it's just astronomical data from the anonymized accounts of 7 million Commonwealth Bank customers reveal the spending of people aged below 59 has either fallen or risen by less than inflation but those aged 60 and above are splashing out more than what prices have increased by generally younger people have uh less Financial savings less buffers less resilience the vast proportion of household debt particularly in the form of mortgages is across the 35 to 44 year old age group and so they're bearing the effects of monetary policy and the cash Rad but quite clearly and simply even those that do not have debt you can see the impact of inflation back on the mountain it's busy at Patty hoy's ski store he sees the Gap when it's time for families to settle the bill we have grandparents coming and they're throwing their credit cards across our County whereas in the past it was generally more spread out throughout the family we know that monetary policy is a blunt instrument and the impact is being felt unevenly across Society but with higher interest rates seemingly here to stay that disparity is only going to get wider yeah the the wealth effect is very obvious um in in terms of people who you know have equity in their homes and and very little mortgage they are here and unfortunately they small proportion of the people that are here and they seem very comfortable they seem to be propping up the market to some extent Economist Nikki hutley says the picture is complex the increase in spending is larger for Boomers than it is for young people but as a total amount it's less than it is for those in their in their Middle Ages so you can't blame the Boomers as so many people like to do um for perhaps demand running uh a little bit hotter than the result Reserve Bank would like It's just tough to be young and it always has been The Reserve Bank backs that up in an internal note it says low wage growth for young people and greater assets for older people mean the pain of income shocks like the past 2 years are felt unevenly the younger people who are struggling with the cost of living their mortgages Etc um they're definitely tightening their belts very substantially and we're seeing a lot of that for people with assets superannuation and Bank deposits Rising interest rates have sent more money their way you saying you cause inflation well sometimes spending money yeah cuz if you got money you spend it so yeah that doesn't help inflation as the generational divide [Music] deepens for

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