From big buys to small indulgences: NZ spending habits shift

New Zealand households are tightening their belts when it comes to big-ticket discretionary spending, but demand for smaller, feel-good purchases, often described as “affordable luxury”, is proving far more resilient. The shift offers a revealing look at how consumer behaviour is adapting under sustained cost-of-living pressure.

 

According to the latest Business Pulse Monthly report from Experian (March 2026), discretionary spending over the holiday period fell 8.9% compared to the previous year. The steepest declines were recorded in personal care services (-14.7%), holidays (-19.5%), and household furnishings (-22.9%), highlighting a clear pullback in larger, deferrable expenses.

 

At the same time, the report identifies a countertrend: continued spending on smaller indulgences that deliver emotional satisfaction without significantly straining household budgets.

 

These “affordable luxury” items include categories such as premium beauty products, fragrances, treat-focused food and beverages and experience-led purchases.

 

The report suggests that when financial pressure increases, whether due to inflation, interest rates, or broader economic uncertainty, consumers tend not to eliminate discretionary spending entirely. Instead, they adjust how they spend. Rather than booking expensive holidays or upgrading furniture, many opt for lower-cost rewards that still provide a sense of enjoyment or normality.

 

This behaviour aligns with broader economic data in New Zealand. Over the past two years, households have faced rising mortgage repayments, elevated food prices, and higher utility costs, all of which have squeezed disposable income. As a result, consumer confidence has remained uneven, and spending patterns have become more selective and value-driven.

 

 

Personal care spending continues to show notable resilience. New Zealand’s personal care Experian Spend Index reached 140% in December 2025, reflecting strong seasonal demand even as budgets tighten. This suggests that smaller self-care purchases are being prioritised, particularly during peak retail periods.

 

By contrast, home-related spending appears to have undergone a more lasting contraction. The household furnishings index dropped sharply to 47% before partially recovering to 74% in December 2025.

 

The report characterises this as a structural shift rather than a temporary slowdown, indicating that consumers may be delaying or rethinking major home upgrades altogether.

 

Spending on pets, traditionally a stable category, has also softened. The animal expenses index sits at 73%, with indications that some pet owners are deferring costly veterinary care or choosing more budget-friendly food options.

 

Digital goods, including streaming services, gaming and software subscriptions, remain relatively steady. New Zealand’s index stands at 92% as of December 2025, slightly below its 2021 baseline but trending upward since 2024. This reflects the continued importance of at-home entertainment, even as households reassess other discretionary costs.

 

Travel, however, remains a standout category. International airline spending has surged to an index of 337%, continuing a strong upward trajectory from pandemic-era lows. This suggests that while consumers are cutting back in some areas, they are still prioritising meaningful experiences, particularly those perceived as high value or long-awaited.

 

Louis Tsang, Head of Analytics Consulting & Insights at Experian A/NZ, says the key lies in understanding what consumers choose to protect when finances are under pressure.

 

“In New Zealand, we’ve seen households scale back on larger discretionary categories – holiday discretionary spending was 8.9% lower, with notable reductions in areas like holidays (-19.5%) and household furnishings (-22.9%),” he says

 

“At the same time, the Experian Business Pulse Monthly shows how many consumers are trading down in ticket size rather than switching discretionary spending off altogether, continuing to prioritise smaller ‘feelgood’ indulgences that remain financially manageable.”

 

He added that spending data provides valuable insight into where demand remains strongest.

 

“Spend trends can provide a grounded view of where demand is proving more resilient. The report highlights how combining Experian Spend Analytics with an organisation’s internal data can support richer segmentation and more forward-looking decisions, particularly when consumer confidence is uneven,” Tsang says.

 

These patterns are unfolding against a backdrop of ongoing financial pressure for many New Zealand households. Elevated interest rates, persistent inflation in essentials and global economic uncertainty, including fluctuations in fuel and commodity prices, continue to weigh on budgets.

 

For businesses, the implications are significant. Understanding the shift toward smaller, emotionally driven purchases can help inform product positioning, pricing strategies, and customer engagement.

 

Rather than focusing solely on high-value transactions, companies may need to adapt to a consumer base that is more cautious, more selective, and increasingly motivated by perceived value and immediate gratification.

 

As economic conditions remain uncertain, the “affordable luxury” trend offers a practical lens through which to interpret changing consumer priorities, highlighting not just where spending is falling, but where it is holding firm.