Inflation is out of control. Everywhere you look, prices are rising and your dollar is not going as far. While there are many reasons for this economic turmoil, economists say one section of society is at the root of the problem – the baby boomers.
We can all see the effects of inflation reflected in the prices around us, but whether these effects are positive or negative, largely depends on your status as a property owner.
Economist Leith van Onselen says that right now “there are three Australias”.
First, he says, there are renters who have suffered double-digit rent increases while simultaneously experiencing the sharpest fall in real wages in Australian history.
Then there are the mortgage holders, making up roughly one-third of Australians. This group is being hammered by aggressive interest rate rises, while also suffering from the falling real wages.
Average variable mortgage repayments have increased by around 50 per cent, shaving tens of thousands of dollars in annual disposable income from the budgets of mortgage holders.
Finally, there are the lucky one-third of households – mostly older Australians – that own their homes outright who are neither affected by the Reserve Bank of Australia’s (RBA) aggressive interest rate rises nor the rental hyperinflation.
It’s no secret that most of Australia’s real estate is owned by older people, with younger generations skewing more towards renting or holding a large outstanding mortgage.
Not only are the baby boomers the generation most likely to benefitting from inflation, but Mr van Onselen says they’re also the generation causing inflation to get worse by spending more – possibly from all that extra rental income they’re receiving.
“According to an analysis of seven million Commonwealth Bank of Australia (CBA) customers’ purchasing habits, those aged under 35 increased their spending by only 3.4 per cent in the year to March, which was less than half the rate of inflation and indicates that the average young person is buying less goods and services,” he says.
“The age group most under pressure was 25- to 29-year-olds, whose spending remained nearly flat in value over the previous year despite a 7 per cent increase in prices.
“By contrast, spending among the over-55s climbed at a faster rate than inflation over the past year, with CBA customers over the age of 75 increasing their spending by approximately 13 per cent.”
The CBA’s data also showed that the substantial increase in spending at cafés and restaurants reported in official Australian Bureau of Statistics (ABS) data has been driven by older cohorts, who are spending 18 per cent more on dining out than the previous year, compared to a 7.1 per cent increase among under-35s.
Older generations are driving Australia’s increased household consumption and are forcing the RBA to respond with higher interest rates.
Has your spending gone up recently? Do you think it’s fair to blame one generation for inflation? Let us know what you think in the comments section below.
Also read: Who will the ATO be targeting at tax time this year?
He must be living on another planet, I can’t name any wealthy baby boomers, most, like myself are struggling to survive. I am one of the real baby boomers born in the late forties.
“Are baby boomers making inflation worse?”
No.
get it right!
Rampant profiteering by banks (excessive difference between the cash rate and what they charge), Developers (need I explain?), governments/councils (checked out your council rates lately?), supermarkets (prices go up by way more than inflation) – just look at the enormous profits made by trhese institutions. Way more than explained by inflation.
What a load of cobblers, of course Baby Boomers aren’t adding to inflation. If they spend 13% more and I don’t doubt they do, checkout the price increase of the basics in the supermarkets, milk, cream, butter,bread, meats, eggs, the list is endless and they’ve gone up way more than 13%. So don’t believe what the Government or socalled economists tells you, it’s a load of crap. And the over 75’s spending increase, why wouldn’t they, the last hurrah trip, while they can still get around. So No, Baby Boomers are not responsible for inflation, however they are responsible for living responsible lives, savings their money, raising and educating their families, paying their taxes and for most part being model responsible citizens, unlike a vast number of the young today. Jacka.
I bet the cafes and restuarants are happy that we are keeping them in business!
are the people after baby boomers glad they all paid taxes [BABY BOOMERS] otherwise how else would they pay the single parents and the unemployed and YES us pensioners who paid there dues
Same as the boomers were brought up as smokers as it was no big deal for centuries and the govt used health reasons to escalate there prices as a revenue raiser.s
IF the govt was really concerned then why wern”t stop smoking aids made cheaper and why is it that baby boomers do not get the same increases inwelfare as single parents and the unemployed THE govt has given them over$100 increase which is a good incentive for them to get a job
Blaming older Australians, particularly the baby boomers, is unfair, as they did not get where they are now without trials and tribulations: – the rebuild of WWII, the inflation rate of 6.33% in 1973, the inflation rates of 7.22% to 7.33% between 1988 and 1990, and now the inflation rate dropped to 7% in the first Quarter of 2023 from the highest in the last 30 years of 7.8% in the previous Quarter. In the previous periods before 2023, no one had blamed the baby boomers for the inflation rates: – WWII was not their faults, neither was the oil crisis in 1973, nor the recession we had to have in 1990, where interest rate went up to 17% p.a.
To blame older Australians for the inflation rate is the easy way out of the real issue here; a population plan for the growth of our economy. according to ABS, over the 20 years to 30 June 2019, the working-age population grew by 32.0%, slower than the growth of the remaining population (40.4%) The slower growth in the working-ages has occurred since 2010. There were 290,600 young people aged 15 years who entered the working-age population while 254,800 people turned 65 years and left the working-age population in the year ended 30 June 2019. We have a smaller work-force population to share the burden for an increase in older population, and inflation rate makes it harder still. You cannot blame this on the baby boomers. All three levels of government have a responsibility for this economic growth in tandem with population growth.
first off i am ababy boomer and my parents were bombed in world war 2We moved to Adelaide in 1955 and in them days we loved 5 mileesfom the city
IT was all paddocks then so it was the baby boomers who built this country
THERE was no welfare
U Could leave your house unlocked as there was no one around to steal
People had to work to survive NOT NOWI
T is greed that is responsible for inflation
Its people not workimg and people having chilfren that they cannot afford as shown by the govt by encouraging them not to find a job by increasing their welfare but not the people who built this country and dies protecting it i have worked60 years and see what has become of this country and baby boomers are not to blame
THE POLITICIANS have a lot to answer for because of selling of assetts
ALLOWING PRICES TO GO UP
NOT keeping up with inflation in pensions and no answers from them when questioned