Australians trade down to smaller treats, Experian says

Experian's latest Business Pulse Monthly report indicates Australians are shifting discretionary spending towards smaller purchases and experiences. The findings point to resilience in categories such as personal care, digital goods, dining and travel.

Its analysis suggests households facing cost-of-living pressure are delaying larger purchases while still making room in their budgets for lower-cost treats. Consumers are also balancing traditional credit with instalment products, such as Buy Now Pay Later services, as they seek greater flexibility in managing their spending.

Among the strongest readings, Australia's Experian Spend Index for personal care reached 131% in December 2025. Cosmetics spending climbed to 220% in the same period, suggesting smaller discretionary categories remained comparatively firm, particularly around seasonal peaks.

Digital spending also showed sustained growth over the period covered by the report. Australia's Digital Goods Index, which covers streaming services, software subscriptions, in-app purchases and gaming, rose from 108% in January 2022 to 151% in December 2025.

Travel was another area of strength. The Australian Experian Spend Index reached 266% for domestic airlines and 311% for international airlines, reflecting households' continued willingness to prioritise experiences even as broader budget pressures persist.

Spending on restaurants, fast food, pubs and cafes also remained relatively steady, suggesting some consumers are still protecting smaller social and convenience-driven purchases even while cutting back elsewhere.

Spending shifts

The broader pattern outlined by Experian is one of consumers trading down in ticket size rather than switching off discretionary spending altogether. Instead of committing to major purchases that can be delayed, households appear to be favouring lower-cost items and activities that offer a sense of reward without a large financial outlay.

Household finances remain under pressure. Experian linked these shifts to persistent inflation, higher energy costs and uncertainty around interest rates, all of which continue to shape consumer confidence and day-to-day budgeting decisions.

Louis Tsang, Head of Analytics Consulting & Insights at Experian A/NZ, said the data indicated a shift in spending patterns rather than a simple pullback.

"What we're seeing is a reshaping of discretionary behaviour. When budgets are under pressure, many households defer larger purchases and redirect towards smaller, more manageable indulgences that still deliver emotional value. In Australia, that shows up in categories like personal care, where the Experian Spend Index reached 131% in December 2025, and in digital goods, where the index increased from 108% in January 2022 to 151% in December 2025," Tsang said.

The report described these purchases as accessible indulgences, including beauty products, treat-led food and drink, and entertainment subscriptions. It suggests that such spending can remain resilient because consumers view it as more affordable than more expensive discretionary items.

That may help explain why digital goods have continued to rise even as broader financial conditions have tightened. Subscription entertainment, software and gaming can represent a modest recurring expense relative to larger one-off purchases, making them harder for households to give up entirely.

Business read-through

For businesses, the data offers insight into where consumer demand has held up despite continued budget strain. Lower-ticket categories, especially those tied to convenience, self-care or leisure, appear to be faring better than postponable big-ticket spending.

The figures can be combined with internal customer data to test assumptions about demand, pricing and customer segments. According to Experian, that approach can help businesses respond to changes in how consumers prioritise spending across categories.

Tsang said businesses should focus on where demand remains relatively firm.

"For many businesses, the opportunity is in recognising where demand is proving more resilient, often in lower‐ticket categories that feel rewarding and 'worth it'. Combining spend trends with internal customer data can help organisations test assumptions, refine segmentation and make more informed decisions about range, pricing and offers," Tsang said.