Inflation has been a hot-button topic for all Americans, but little has been said about how it has been distributed.

According to two separate pieces of research, it's young adults born after 1997 who are disproportionally affected by the cost-of-living crisis.

Matt Colyar and Michael Bugay of Moody's Analytics say Gen Z is bearing the brunt because they tend to spend more on items most affected by inflation.

One example is auto insurance. According to recent data, Gen Z motorists are spending 2.6% of their income on securing a policy, compared with an average of 2.2%.

While the cost of food in grocery stores has started to cool recently, restaurant inflation remains elevated because of labor shortages.

Moody's research suggests that this age group typically spends 5.5% of their cash on meals away from home, markedly higher than the 5% seen across most U.S. households.

Adding to the pinch is the fact that younger workers tend to earn less than their older, more experienced counterparts.

As a result, a larger chunk of their take-home pay is being spent on essentials, while higher earners have been better able to weather the storm.

Gen Z seeks extra credit

The fact that Gen Z is feeling the pinch is nowhere more evident than in their credit behavior.

According to a TransUnion report, people aged 22 to 24 are now borrowing at much higher levels than their counterparts at the same point a decade ago.

An estimated 84% of Gen Z consumers had a credit card at the end of 2023, compared with 61% of millennials back in 2013. And when adjusted for inflation, their balances are bigger, too.

This has also fed through to delinquency rates, as almost 10% more Gen Z borrowers are now over 60 days behind on repayments.

TransUnion warned this could make it harder to build a robust rating and access cheaper credit in the future.

The company's executive president, Jason Laky, said, "As long as inflation remains elevated and the cost of goods remains so as well, balances across products such as credit cards, personal loans, and auto are likely to continue to grow."

While millennials had to contend with the fallout of a global financial crisis, Gen Z has been dealt a double whammy of Covid and inflation.

Not only did they miss out on years of socializing and hedonism during lockdowns, but they're now having to pay more to go out now restrictions have been lifted.

There is one bright spot for Gen Z: they're much more likely to change jobs than other age groups.

Moody's notes that those who do switch roles tend to earn more—and these pay bumps may help alleviate their financial pain.