Statistics Canada has unveiled its annual report on household spending, shedding light on how Canadians utilized their earnings throughout 2021. This comprehensive survey offers valuable insights into spending habits and allocation of income, making it a valuable resource for understanding how Canadians use their earnings. Whether you’re a resident or newcomer, this data provides essential information for financial planning and budgeting in Canada.
As well as providing insight into the distribution of income across different categories of expenditure, the study offers a comprehensive analysis of household spending in Canada in 2021. Predicting the initial costs of living in Canada will be very helpful for newcomers to the country.
According to Statistics Canada, the average yearly expenditure on goods and services by Canadian households in 2021 was $67,126, a 2.7% decrease from 2019. The consumption of households has not decreased since 2010. Taking into account a 4.1% consumer inflation rate during the 2019–2021 decade, Canadian household expenditures actually declined by 6.5%, reflecting a general decline.
The COVID-19 pandemic’s effects, which impacted household expenditure categories and resulted in a general drop in the consumption of goods and services from 2019 to 2021, was the main cause of this downturn. It’s critical to recognize that some outcomes can be biased, such as transportation spending, which might have become more typical as circumstances changed.
The expenditure trends in 2021 followed the same general pattern as in years prior. When it came to spending, housing accounted for 31.4% of all expenses for Canadians, followed by food (15.4%) and transportation (15.0%). These areas continue to receive the majority of household spending, which is indicative of their enduring significance in Canadians’ financial planning.
How Canadians use their earnings – Housing
In 2021, Canadian families allocated an average of $21,106 to housing, demonstrating a 4.5% increase from 2019. The amplified costs associated with shelter, encompassing both rent and homeownership, affected mortgaged homeowners and renters alike, attributing to the upswing in housing expenses.
For renters, the average accommodation cost in 2021 amounted to $15,256, indicating a 5.9% surge. Within this category, the predominant expense was rent, averaging $13,060, signifying a notable 6.8% rise compared to the expenses incurred in 2019.
Likewise, homeowners with mortgages in 2021 reported an average housing expenditure of $33,118, reflecting a substantial 7.8% increase from the figures recorded in 2019. Significantly, more than half of this expense was earmarked for mortgage payments, witnessing a robust 9.1% increment since 2019.
The study also encompassed additional housing-related expenses, such as those associated with communication and entertainment, which include costs related to internet connections, phone services, and electronic entertainment devices. Notably, spending on communication experienced an upsurge in 2021, with an average of $3,001 per household, marking a substantial 12.4% increase when compared to figures from 2019. Amplified spending on communication expenditures primarily drove this increase.
- Expenditure on telephones and equipment skyrocketed by a substantial 114.1%.
- Internet services expenses observed a notable increase of 21.7%.
- Digital services experienced a significant rise, with a 30.5% increase in spending.
- Outlays related to postal, courier, delivery, and various other communication services surged by 68.7%.
Transportation
By comparison, the average household transportation costs in Canada in 2021 were $10,099, a notable 20.7% lower amount than in 2019. Private transportation expenses, including those for Uber and taxis, came to $9,501 of this total.
The average amount spent in 2021 on buying cars, vans, and trucks was $4,083, a significant 16.7% drop from the 2019 numbers. Even though the average price of gasoline increased by 12.8% between 2019 and 2021, the average amount spent on gasoline and other fuels—$2,080—was reduced by 14.1%.
Additionally, expenses related to public transportation experienced a significant decline, with the average Canadian household allocating $598 in 2021. This amount represented a reduction of over 50% compared to the 2019 data.
Recreational services and dining out at restaurants
In 2021, the average household expenditure on recreational activities stood at $4,223, reflecting an 8.7% decrease from 2019. This decline primarily resulted from reduced spending on recreational services, which included movie theaters, sporting events, performing arts, and package trips, and witnessed a substantial drop of 55.0%. The repercussions of the pandemic in 2021 prompted many restaurants to adapt, offering delivery, takeout services, or operating at reduced capacity. Consequently, this resulted in a notable reduction in the average household spending on food from restaurants, totaling $2,189—a 21.1% decrease compared to 2019. In contrast, spending on store-bought food rose to $8,065, marking a 7.0% increase in 2021.
Regional disparities in expenditure
During 2021, households in British Columbia and Alberta exhibited the highest average spending on goods and services, with amounts totaling $75,028 and $75,003, respectively. In contrast, New Brunswick and Quebec reported the lowest average expenditures, amounting to $57,582 and $57,889, respectively. This data underscores regional disparities in spending patterns across Canadian provinces.
How Canadians use their earnings – Shelter
In contrast, the lowest spending on shelter was observed in New Brunswick and Newfoundland and Labrador, amounting to $14,685 and $14,736 respectively. Out of their total consumption, Ontario households allocated the highest percentage of their income (34.6%) to housing, whereas Newfoundland and Labrador households allocated the lowest (24.4%).
Between 2019 and 2021, Prince Edward Island recorded the most significant increase in average housing expenditure, with a rise of 10.7%. Following that, Ontario noted a 7.8% increase.
Transportation
The two provinces having the highest average household transportation spending in 2021 were Manitoba and Alberta, at $11,230 and $11,066, respectively. Households in Quebec, on the other hand, reported spending the least on transportation, coming in at $9,409. The main reason for this discrepancy was that while Quebec spent $8,979 on private transportation, Manitoba and Alberta spent $10,798 and $10,438 on private transportation.
Households in British Columbia and Ontario reported the greatest average spending ($751 and $724, respectively) on public transit. At $277, households in New Brunswick spent the least on average on public transportation. These variances represent regional variations in Canadian transportation expenses.
What potential alterations could have occurred?
As mentioned, the COVID-19 pandemic substantially affected the outcomes of this study, indicating potential shifts in future Canadian spending habits.
For instance, the notable reduction in transportation expenses in 2021 was influenced not only by the volatile car market but also by partial lockdowns in effect across Canada. The ongoing increase in the average prices of used cars in Canada, coupled with supply challenges in the automotive industry, likely contributed to reduced spending. However, the lifting of lockdowns and the return of people to workplaces are expected to trigger a rebound in public transport spending. Additionally, rising gasoline prices may contribute to increased transportation expenditure in the future.
Similarly, it makes sense to expect an increase in average spending on recreational services because of comparable considerations. As Canadians start buying in-person again, industries like retail and tourism—which faced severe labor shortages both during and after the pandemic—should see modest recoveries.
But since 2021, one area of investment has consistently increased: housing. According to data from Statistics Canada, housing costs in Canada are rising at the quickest rate in three decades, especially for rent. These expenses are probably going to climb gradually in the future, helped along by increased interest rates that affect homeowners who have mortgages. This will eventually lead to a decrease in the availability of homes and an increase in the demand for rentals.
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