AI becomes SA’s newest budget tool as consumers rethink spending decisions weekly

South Africans have found a new weapon in the cost-of-living war: artificial intelligence.

Not to write poems, generate fake Studio Ghibli portraits or settle dinner-table arguments, but to ask a far more dangerous question for retailers: Do I really need to buy this?

SpendTrend26, the latest consumer spending report from Discovery Bank and Visa, shows that 40% of surveyed South Africans now use AI tools weekly to help decide what to buy, where to buy it, or whether to buy at all. Among those using AI, 42% found a cheaper alternative, 35% switched brands or retailers, while 35% avoided a purchase because of risk concerns.

That is probably the most interesting consumer signal in the report. AI is no longer just a productivity tool. It is becoming a household budgeting tool, a deal hunter and, at times, a tiny digital bouncer standing between consumers and unnecessary spending.

South Africans are not spending more recklessly. They are spending smarter. That is the central thread running through the SpendTrend26 report, a dense, data-rich snapshot of how households are navigating an economy that still feels tight, even as pressure begins to ease.

Smarter shopping rather than more

On the surface, the numbers offer a measure of relief. Consumer spending in 2025 edged 0.8 percentage points above inflation for the first time since 2022, helped by four interest rate cuts that lowered borrowing costs and freed up some disposable income.

But households are not taking the extra breathing room and rushing back to discretionary spending. They are using it to stretch what they already have.

“Rather than increasing discretionary spend, households are using rewards, budgeting tools and value-seeking strategies,” Discovery Bank CEO Hylton Kallner notes in the report.

That shift shows up everywhere. Grocery shopping has become more tactical. Consumers are comparing prices, buying in bulk, leaning into store brands and increasingly shopping online where it is easier to track deals and avoid impulse buys. The data shows online grocery spending continuing to grow in double digits, even as in-store growth softens.

Eating habits tell a similar story. Dining out is down and takeaways are becoming less frequent with an increase in home cooking, particularly among millennials.

The digital payments trend

SpendTrend26 confirms what has been building for several years – digital payments are no longer an alternative, but have become the default. An overwhelming 94% of surveyed South Africans now prefer card or digital payments, while virtual card usage has surged and digital wallets account for nearly a third of in-store transactions.

As fraud becomes more sophisticated, consumers are responding in kind, scrutinising transactions, adopting virtual cards and, notably, turning to artificial intelligence as a line of defence.

“Thirty-two percent are now using AI itself as a fraud defence – asking it to check whether a message or link looks suspicious. We are seeing material benefits from embedding AI tools and functionality into almost every area of Discovery Bank, for example our TRUST Alert, an AI risk score applied to every transaction, has cut confirmed fraud on flagged transactions by an estimated 85%,” Kallner said.

Lineshree Moodley, country head for Visa SA, noted that although digital fraud rates are coming down due to better controls, fraudsters are increasingly relying on social engineering tactics that exploit urgency, trust and familiarity.

“Encouragingly, consumers are adapting quickly, showing greater awareness, stronger authentication preferences, and a growing ability to spot red flags,” she said.

A shift towards healthier choices

Another shift worth watching sits at the intersection of health and spending. The report flags the growing use of prescribed weight-management medication, including GLP-1 therapies, as an emerging force in consumer behaviour. This is not just a healthcare story. It is a retail story.

Among households using these treatments, spending patterns are changing in measurable ways, with more money going to healthier food, less to takeaways and alcohol.

Meanwhile, on the discretionary side, travel has staged a comeback. Spending on travel rose across all income groups in 2025, with higher-income consumers leading the rebound. But even here, the tone has changed. Value for money has overtaken relaxation as the top priority when planning a trip.

Timing of spending

Perhaps the most telling insight in the report is not about how much people spend, but when they spend. South Africans are increasingly clustering their spending around key moments: Black Friday, long weekends, paydays, major sporting events. These are planned spending bursts, suggesting a move away from impulsive buying.

Black Friday alone drives a 57% uplift in spending, with big-ticket purchases carefully timed to coincide with discounts.

“South Africans are actively planning around known moments in the calendar – concentrating spend into periods that feel familiar, expected and worth prioritising,” Moodley said.

Even in areas that might raise concern, such as online sports betting, the data points to a degree of control. Many consumers report setting budgets and sticking to them, suggesting that even riskier categories are being approached with a level of discipline.

That discipline is the thread that ties the entire report together.

It is visible in the way consumers manage subscriptions, actively pausing and resuming services instead of letting them run unchecked. It is visible in the way they engage with rewards programmes, with 85% saying they are using them more actively than a year ago. And it is visible in the way they approach credit, with more accounts in circulation but more measured usage.

However, there is an edge to the outlook. The report warns that global energy shocks, trade disruptions and tariff pressures could push up costs again in 2026, potentially squeezing households just as they begin to regain footing.

If that happens, the discipline we are seeing now is likely to deepen rather than fade. SA consumers have spent the past few years learning how to do more with less. The SpendTrend26 data suggests they are not about to forget how. DM