Canadian consumer spending up from previous year

January 2011 –

Canadians are spending more on basic consumer goods including gasoline, but that’s not necessarily because there’s a hole burning in their wallets.

According to a new Statistics Canada report, the Canadian economy saw a 13.8-per-cent increase in gasoline sales between November 2009 and November 2010. That growth was part of an overall gain of 5.3 per cent made by the country’s retail economy sector.

Not easy to cut back on gas

Ambarish Chandra, a UBC economics professor, said that unlike other products, consumers don’t cut back on gas prices despite price increases.

“People don’t cut back on consumption very easily,” said Chandra. “You’re sort of committed to your commuting patterns and the amount of energy you use in general.

“Prices rise but the quantity consumed doesn’t necessarily fall and that’s why total revenue numbers tend to rise even in the short run.”

Similar situation

Chandra said the current situation is not quite at the point of the price increase of 2007, which saw prices climb to $1.50 per litre by the end of that year, according to vancouvergasprices.com.

“What we saw back in 2007 was that the rise in prices stopped being accompanied by a one-for-one rise in revenue because, at some point, people started cutting back on consumption.”

The same website lists today’s average pump price at $1.216 per litre.

Chandra said that while it’s yet at that point, the situation will inevitably happen again.

“There are always some people that will balk at the price, the question is how many people will it take to make a noticeable difference,” said Chandra.

“Whether it happens next year, this year or two years from now, at some point we’ll get there again.”

Other hot commodities

The gasoline sector was one of a few to see business jump by double-digit percentage points.

Jewelry, luggage and leather goods stores enjoyed the largest increase in sales at 17.6 per cent, while automotive parts and tire stores weren’t far behind with a 14.3 per cent jump, according to the report.

Overall, retail sales were pegged at $37.31 million for November, up from $35.44 million a year ago.

British Columbia retail sales were slightly lower than the rest of the country at 2.7 per cent, matching Nova Scotia and ahead of only Nunavut, the Northwest Territories, Newfoundland and PEI.