New Zealand households cut festive discretionary spending

Experian says New Zealand households cut discretionary spending over the holiday period, with spending in those categories 8.9% lower than a year earlier.

The latest analysis points to a sharper retreat in larger optional purchases than in lower-cost items, suggesting consumers are delaying more expensive spending while still making room for smaller purchases that offer a sense of reward.

Among the biggest declines were holidays, down 19.5%, household furnishings, down 22.9%, and personal care services, down 14.7%. The pattern suggests households under cost-of-living pressure are becoming more selective about where they spend.

That shift comes as many households report strained finances. More than two in five New Zealand households, or 40.6%, said their income was either not enough or only just enough in the year to June 2025, according to Stats NZ figures cited in the analysis.

Spending shifts

Smaller discretionary categories have held up better than big-ticket purchases. Personal care spending, while lower overall, still showed seasonal strength, with the Experian Spend Index reaching 140% in December 2025.

The report describes this as a shift toward lower-cost indulgences rather than a complete retreat from discretionary spending. It highlighted areas such as beauty products, fragrances, treat-oriented food and drink, and experience-led purchases as categories that can remain more resilient when household budgets are tight.

Travel was a notable exception to the pullback in larger spending categories. International airline spending reached an Experian Spend Index of 337%, indicating that overseas travel remained a priority for many consumers despite broader caution.

Digital goods also showed relative stability. Spending in that category, which includes streaming services, software subscriptions, in-app purchases and gaming, stood at 92% in December 2025 and has been rising since 2024.

By contrast, home-related spending contracted more sharply. Household furnishings fell to an Experian Spend Index of 47% before partly recovering to 74% in December 2025, a trend the analysis described as a more lasting change in spending habits rather than a short-term dip.

Pet-related spending also appeared weaker. Animal expenses were recorded at an index level of 73%, with the data suggesting some households may be delaying costly veterinary care or switching to cheaper food options.

Consumer priorities

The figures offer a snapshot of how household priorities are shifting as budgets tighten. Rather than stopping discretionary spending altogether, consumers appear to be cutting back on purchases that can be postponed while protecting spending seen as emotionally rewarding or personally important.

That helps explain why travel and certain personal spending categories remain comparatively firm even as furnishings and holidays more broadly fall back. The distinction is less about whether consumers are spending and more about the size, timing and purpose of those purchases.

Louis Tsang, Head of Analytics Consulting & Insights at Experian A/NZ, said the data showed what households were choosing to preserve under financial 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%). 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 'feel-good' indulgences that remain financially manageable," Tsang said.

The findings also carry implications for retailers and service providers trying to gauge demand in an uneven consumer environment. Businesses exposed to larger household purchases may face a slower market, while those selling lower-cost treats or services may see steadier demand.

Spending data can help businesses identify where resilience remains and where caution is growing. Experian says combining broader transaction trends with internal customer data can help organisations sharpen their view of consumer segments and spending behaviour.

"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 said.