Spending that isn’t backed by wages
On the surface, the New Zealand consumer is holding up. Kiwibank’s Household Spending Tracker shows electronic card spend up nearly 5% year-on-year to June 2026. For a retailer or hospitality operator watching the till, that looks like a market that has stabilised.
Dig underneath and the mechanism is what should worry you. Kiwibank’s third annual State of Savings Index, surveyed by Talbot Mills, found that 40% of Kiwis took on debt in the past 12 months to cover increased living costs. This is not spending funded by rising incomes or growing confidence. It is spending propped up by borrowing, and debt-funded demand reverses far faster than income-funded demand when conditions turn.
The supermarket signal
The clearest leading indicator is where the borrowing is showing up. The Kiwibank breakdown found 19% used Buy Now Pay Later, 12% borrowed from family and friends, 8% took personal bank loans and 7% lifted their credit card limits.
Kiwibank chief executive Steve Jurkovich singled out the BNPL shift. “We are seeing a definite trend of people finding that they are having to turn to and use Buy Now, Pay Later in situations like supermarkets and other places where we probably didn’t historically think that Buy Now, Pay Later would be showing up,” he said.
That matters because groceries are the top budget pressure point for 68% of Kiwis, ahead of rent or mortgage, power and fuel. When people finance food on credit, the household buffer is gone. Sorted’s Tom Hartmann warned that BNPL for essentials like petrol and food can spiral, with entire paychecks going to repayments.
The thinness of that buffer is stark. 28% of Kiwis said they could not cover an unexpected $500 bill without borrowing, selling something or reaching for a credit card.
Two economies, not one
The data contains a genuine bright spot. The share of Kiwis who regularly save edged up from 41% in 2024 to 43% in 2025 to 44% in 2026, and 59% now run a household budget, with 85% saying they broadly stick to it. Jurkovich noted that “if you can just get started on that habit, that the habit sticks.”
But a 44% savings rate sitting next to a 40% debt rate is not one balanced population. It is two. Those who can save are saving; those who cannot are borrowing. The stress is heavily concentrated. Under-30s were most likely to take on debt at 61%, against 55% for 30-44s, 35% for 45-59s and just 15% for those 60 and over. Renters, Maori and Pacific peoples were significantly more likely to have taken on debt than NZ Europeans. If your customer base skews young or renter-heavy, your demand forecast is sitting on the most exposed part of the market.
The composition tells the story
Westpac’s card data confirms the pattern. Senior economist Satish Ranchhod found 36% of households have wound back discretionary spending and around 15% have delayed or cancelled travel, while around 30% have changed how they shop on groceries, buying fewer or cheaper items. Kiwibank’s own figures show grocery nominal spend up 3.5% over the June quarter while transaction volume rose just 1.8% – people buying less and paying more.
Experian’s July survey reinforced the mood, with only 38% of households optimistic about their finances, 67% reporting increased cashflow pressure and a third relying on credit for everyday expenses.
Why the buffer could vanish fast
Inflation is easing but unevenly. Annual CPI ran at 3.1% for the March 2026 quarter, driven by electricity up 12.5%, council rates up 8.8% and meat and poultry up 8.6%. The household living-costs index rose a gentler 2.1%, but that relief came from falling mortgage rates and flows to owner-occupiers, not renters facing the full force of grocery, power and rates rises.
Ranchhod flagged a fresh threat. Global oil prices jumped around 10% in a week in July 2026 on renewed Middle East tension, and pump prices could head back above $3 a litre. For households already financing groceries, a fuel spike is exactly the kind of shock that turns a slow pullback into a sudden one.
The lesson for anyone reliant on discretionary spend is to stop reading the aggregate card figure as a health check. A meaningful share of it is borrowed. Watch the leading indicators – BNPL at the checkout, thinner grocery baskets, and any tightening in credit – because when that debt-funded demand reverses, it will move faster than the headline numbers are telling you now.
Sources
- 40% of Kiwis taking on debt to cover increased living costs – Kiwibank (2026-07-23)
- State of Savings: Kiwis missing out on $500m; two in five take on debt to cover cost of living (2026-07-22)
- New Zealand households cut spending as confidence falls (2026-07-15)
- New Kiwibank spending data shows we are still spending as we need to (2026-07-11)
- First Impressions NZ retail card spending June 2026 (2026-07)
- Consumers price index: March 2026 quarter (2026-03)
- Household living costs increase 2.1 percent (2026-03)