Economists warn businesses will face consequences as New Zealanders cut back on spending

Kiwis are beginning to pull back on buying those items we don't need right now.

In the last couple of months, Kiwis have spent about 10 percent less on things like cars, clothing and electronics.

Economists say it's a good thing because if we spend less, prices should stop going up as quickly. But it also means serious financial pain is on the way for some.

Kiwis are focusing on the smaller luxuries that won't break the bank.

"It's just my kimchi! It's my luxury and my kids love it - I missed out last time, and the week before, so I can afford it this week," one said.

With food, fuel and mortgage payments now eating up more and more of our earnings, those things we don't have to buy this week or next are starting to take a backseat.

Digital payment company Worldline monitors card spending and has noticed the start of a drop in discretionary spending.

Over the last couple of months, spending on the latest gadgets took a hit, with sales of electronics down 12.4 percent.

Car sales are down 5.5 percent, and people are putting off buying that new jacket they've had their eye on, with clothing down 8 percent.

And Kiwis are spending 12 percent less at cafes, bars and restaurants, compared to the same time last year - and remember last was already down.

"Now we can't afford to go to the pub, or go out to restaurants," one Kiwi said.

"I'm delaying buying a new car, this one's only 27 years old," said another.

Financial advisor Hannah McQueen said her clients are delaying larger spending where they can.

"Items like car replacements, renovations or repairs on the house."

ANZ's chief economist Sharon Zollner said the trend is likely to continue, meaning some retailers, bars and restaurants could be forced out of business in the coming months.

"Just as consumers are brave enough to leave their houses, they're looking at their bank balance and going - 'actually I think we should eat at home tonight'."

The Reserve Bank is walking a tightrope, it's raising interest rates because it wants Kiwis to spend less, to bring prices down. But it means businesses will disproportionately bear the brunt.

"They're playing the long game here. Entirety defensible, but a little scary if you're a coffee shop or restaurant," Zollner said.

In an economy in conflict, to curb inflation we need prices to come down, but at the same time, retailers and hospitality are fighting for their lives after years of unprecedented downturn.