Households make ‘tactical’ choices to stretch budgets as cost-of-living stress hit a decade-high

Australian households are increasingly switching providers, trading down to cheaper products and tapping into loyalty programs to cope with cost-of-living stress, which has hit a decade high.

That’s according to a new National Australia Bank consumer sentiment survey on Monday, which revealed households grappled with elevated levels of stress in the first three months of 2026.

The dominant driver was cost of living as concerns rose to their highest level since 2014, reflecting stubborn inflation and persistent price increases across groceries, utilities and housing.

NAB noted the survey was conducted before the US and Israel launched military strikes against Iran on February 28, with the conflict expected to further impact sentiment around inflation and geopolitical uncertainty.

But rather than simply cutting back, NAB said households were becoming more deliberate and tactical in their spending.

About 21 per cent of consumers have switched insurance providers due to price increases, which NAB said suggested loyalty was weakening even for large, infrequent bills where people may previously have tolerated higher costs.

Recurring monthly services were also under scrutiny. Nearly one in five consumers switched internet or mobile providers and switched streaming services because of price.

“This points to households actively reassessing the value of ongoing subscriptions — chasing better offers in telco markets or rotating and pruning streaming services to keep costs down,” NAB said.

Over the past three months, Australians also adjusted their shopping behaviours in response to various factors, including cost, value, environmental and social considerations.

The most pronounced shifts were in value-seeking behaviours.

Overall, the net balance of consumers who changed to less expensive products to save money rose sharply from 26 per cent in the fourth quarter of 2025 to 44 per cent in the first three months of 2026, while those reporting they were mindful or careful about where they spent their money rose from 35 per cent to 53 per cent over the same period.

A large number of consumers were also using loyalty programs or reward schemes more regularly and shopping more during sales and discount periods. Fewer Australians used buy now, pay later schemes.

Looking ahead, NAB said there was widespread belief interest rates would continue to rise over the next 12 months.

The Reserve Bank of Australia has already delivered two successive interest rate rises this year.