Are baby boomers to blame for inflation?

Before ‘the race that stops the nation’ last week, the Reserve Bank found another way to stop Australians in their tracks – it lifted the base rate by 0.25 per cent, citing inflation as the key factor once more.

In the ensuing days, financial commentators propounded theories as to what – or who – was driving inflation in the wrong direction. Interestingly, in mainstream media at least, it came down to somewhat of a generational point-the-finger exercise.

In one corner, we had the baby boomers. Roughly speaking that’s those aged 59 or older in 2023. That takes in quite a few YourLifeChoice readers! And in the other corner we have those pesky ‘young kids’, the gen Ys and gen Zs of Australia.

As someone who sits outside all those camps (born in 1965), I can smugly claim, ‘It’s not my fault!’ But is it really one generation’s fault more than another? Do we need to play a generational blame game here? Or is rising inflation a more nuanced affair?

Inflation generation

After Without a Fight saluted in the Melbourne Cup, the AFR kicked off another fight of sorts. An article penned by Duncan Hughes came with a somewhat finger-wagging subheading. In part it read, ‘the spending habits of young adults are making it hard to curb inflation’.

To be fair to Mr Hughes, it was more the subjects of his article rather than him blaming the young for ballooning inflation. One such subject, Michael Valos, said: “I scrimped and saved during my 20s [to] save a deposit for a home.”

Referring to his children in their 20s, Mr Valos followed up: “The younger generation is living more in the moment. Their attitude is, ‘Stuff it, let’s spend it now’. This is a generation that expects to go to restaurants, that expects to travel.”

Days later, though, Leith van Onselen, writing for MacroBusiness, came out swinging, metaphorically speaking. With a comprehensive suite of statistics and accompanying graphs, Mr van Onselen argued the opposite was more likely true. “The data does not support this contention,” he wrote. “If anything, it shows that the spending habits of baby boomers are driving up inflation.”

The final line of Mr van Onselen’s article leaves readers in no doubt as to his position. “The AFR is dead wrong: controlling inflation hinges, in part, on curbing the profligate spending of baby boomers.”

Us vs Them

What’s interesting, and perhaps instructional, is Mr van Onselen’s use of the term ‘in part’ in his concluding paragraph. There are indeed many moving parts that drive inflation and identifying the crucial ones is not easy, even for experts.

Neither of the articles above mentions non-generational factors, for instance. Are there such factors affecting inflation? According to The Australia Institute, yes, and they may be exerting a greater influence than the spending of any generation.

In a recent podcast, institute deputy director Ebony Bennett and executive director Richard Denniss painted a different picture. Very different. They contend that it’s corporate profits rather than general spending that’s the culprit.

Mr Denniss made a similar assertion last year, and his views have not changed since.

Cutting through the arguments

So who should we believe? In all likelihood, there are elements of truth in all the arguments. One can only hope that those who can play an active role in dampening the inflation spike, do so.

That may include ordinary Australians, like you and me, perhaps tempering our spending habits. Regardless, playing a generational blame game is unlikely to have any constructive effect.

What are you thoughts regarding inflation? Should consumers be spending less or should businesses be less greedy with their profit margins? Let us know via the comments section below.

Also read: Inflation still rising, sparking rate hike fears

Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. I believe no generation in particular is responsible for inflation but a whole series of external and internal factors. The Covid effect on supply lines with our factory estate, China shut down and shipping costs through the roof. The Russian war on Ukraine increased fuel costs which affects everything and internally we had wet weather affecting food crops; the government doing a deal with energy companies to increase electricity prices by 22% when wholesale prices fell and phasing out domestic gas. On top of all this many companies exploited the expectation of higher prices and made record profits.

    A large part of the inflation equation is housing, so to make owning or renting a home more expensive by increasing interest rates to get inflation down is about as daft as emptying a tub by turning on the water tap.
    The irony is that higher interest rates hurt only part of the population, that is renters and mortgagees and gives those with savings (more likely Boomers) even more interest income to spend.

    If the government was serious about curbing inflation and spreading the load, instead of raising interest rates so high it would add a higher luxury rate of GST on non essentials, increase standard GST and make some savings tax free. Slowing retail sales would reduce company profits and increase competition.

  2. Inflation is complex. There are different factors which affect it. Cost pull and Demand Push.

    The first is that prices are driven up by key inputs.An example is fuel. Fuel is a key commodity, if fuel prices climb too much, then businesses such as transport and retailers will lift their prices. It’s often driven by factors outside of our control such as the war in Ukraine and global influences.

    The second is from Demand. That’s driven by consumption and demand exceeds available supply. It’s not generally a problem where a country is not at full production, because new businesses can fill it, or existing businesses increase. Factors which contribute here would be availability of labour.

    The idea behind interest rates is that by increasing rates, fewer people will borrow. Others instead of spending will save it to get the higher rates rather than spending it.

    These explanations don’t matter to most people, who are affected by higher costs in their daily expenses. They can just see it’s more expensive to live.

    A lot of the data, does show that baby boomers are the group spending. This group often own their homes, meaning interest rate increases are not a factor here.,Baby boomers are also a very large group. I was born in 1964 meaning I am included in this group.

    I would argue though that a lot of the responses are incorrect and misplaced. These include cancelling and delaying projects. The reason is that these will add to future efficiency and production. Better transport means workers and goods can be transported more quickly. Better trains means enhanced travel time and capacity.

    Economics can be quite technical, as I have outlined. This doesn’t matter though when people are facing hardship.

    Arguably however, the Stage 3 Tax Cuts should not go ahead. When you think about it, it creates more disposable income, which creates more spending. It is inflationary. They will go to the wealthier households, will affect government spending on things like healthcare, aged care, income support through pensions, NDIS etc. They are also likely to add to inflation.

  3. What a strange system we operate under. The unemployment rate is TOO LOW. The Reserve Bank wants HIGHER UNEMPLOYMENT. Yet we PUNISH the unemployed by paying them substantially less than they need to survive, and massively less than aged pensioners get. This is clearly a massive case of cognitive dissonance (the state of having inconsistent thoughts, beliefs, or attitudes, especially as relating to behavioral decisions and attitude change) on the part of the economic system successive governments follow.

    Do you WANT people to be seeking work, and thus increasing the inflation rate under the algorithm used and increasing the fiscal pressures on the vast majority, or do you want inflation to reduce, and the pressures on the vast majority to be eased? If you want a lower inflation rate – the answer is obvious. We need to encourage people to leave the workforce. So, what to do? Increase the amount the unemployed are paid, for a start. Many of these are people who are over 60, will never be looked at by an employer again because they are too old and too close to retiring so why start someone only to replace them in a few years, and so they are subsisting on Newstart until they hit 67 when suddenly they change allowances and can afford life’s expenses again.

    Why not just give them the aged pension rate of payment from 60 or something, so they can transition out of the workforce. In one fell swoop you free up career paths and openings for younger folk to enter the workforce, and you get a load of old people who don’t want to be there anymore out. And you increase the number of unemployed (in the stats) so that under the (clearly flawed) algorithm we look like we’re a raging success.

    The formula is broken. It has failed to account for the huge fluctuations in the inputs that resulted from the Pandemic disruptions.

  4. Blaming different generations for inflation is the most ridiculous argument as economists justify the causes and effects of our domestic inflation. With Globalisation., we invariably import inflated costs to our economy, like external factors, imports of fuel, domestic energy owned by foreign companies, imports of manufactured goods, and medications. In other words, our economy, which was once closed, is now open to the side effects of global ill fortune, such as wars, climate change, fluctuation of currency rates, and borrowing costs of money.

    To control our inflation rate, both the RBA and the Government need to analyse the causes and effects of our inflation rate: the external causes versus those of domestic causes. The monetary policy tool in raising interest rates to curb the overall domestic inflationary rate has only minimal effects on the inflationary rates caused by external factors imported to our economy. That is why our Government has indirectly subsidised petrol and energy costs to households through fiscal policy. Once we are successful in the transformation to green energy, our economy will be free from this external inflationary factor, and we can control our domestic inflation rate better.

    To blame the baby boomers for inflation is unfair. They worked all their life, and are entitled to enjoy the fruits of labour. To deny their lifestyle at their stage of life is cruel. Equally, it is equally unfair to blame the younger generations. With the advance of technology, the younger generations grow up in an environment of instant gratification: when do you want it? NOW! This is a lifestyle encouraged by the rich Baby Boomer parents, who help their children buy $2 to 3 million dollar homes. These parents were able to do that through the rich dividends from the Finance Industry, which earned gigantic profits from the rising interests raised by RBA in its efforts to control our externally infused inflation rate.

    Blaming games to solve our inflation rate is not the true economic answer to defeat the inflation dragon from overseas.

  5. The cost of housing is the major driver of inflation in Australia. All our governments are to blame for treating housing as an investment by offering speculative investors a range of tax incentives to join the game.

  6. 😂😂😂 it’s always the baby boomer that’s at fault..
    I believe it’s governments & their mismanagement of funds ‘Taxes’ ..
    MP’s having exorbitant pay rises while every Australian is doing it hard .. Albanese & his penchant for giving away tax payer money..
    his stance on CC.. while enlarging his own carbon footprint..
    NO.. I don’t think it’s the ‘BB’ causing inflation..

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