Soaring energy prices in 2005 triggered the biggest gain in household spending in eight years, according to a recent report from Statistics Canada.

All told, the average household spent $66,860 — up 5.1% from the year before and more than twice the inflation rate for the year. It was the fastest rate of spending growth in 10 years, since the agency first introduced its annual survey of household spending.

Spending in Alberta, British Columbia and Ontario was well above the national average. But spending was highest in the Northwest Territories, where it averaged $89,730 a household. Newfoundland and Labrador, where households spent an average $52,610, still had the lowest provincial average, but even this was a gain of 5.5% from 2004.

Although Canadian families had to allocate more of their household budgets to gasoline and utilities, households in the booming Western provinces had more to spend on automobiles, cellphones and electronics. Alberta led the way in spending in 2005 on the purchase of vehicles with a 20% jump from the year before. Overall, Canadian households reported a 7% increase in the purchase of private motor vehicles, including vans and SUVs. Average spending on gasoline jumped 10% in 2005.

Average spending on shelter was up by 3% in 2005, mainly because energy prices rose 5%. Spending on natural gas was up by 8% to $630, while spending on electricity rose 3% to $1,100 and property taxes were up by 6% from the year before to reach an average $1,530 in 2005.

It seems Canadians were dining out more in 2005. Spending on food, at an average $7,140, was up 3.3% from 2004, mainly because spending on restaurant meals jumped by 10%. However, spending on food in 2005, at 10.7% of total household spending, was actually the lowest ever as a proportion of total spending. StatsCan reports food represented 19% of total household spending in the 1960s when this survey began and was then the largest single expenditure item in the budget of Canadian households. The proportion of the average budget devoted to food has declined constantly since then, and it now ranks as only the fourth largest item after taxes, shelter and transportation.

Homeowners with mortgages spent an average $19,320 on shelter in 2005, or about 22% of their total expenditures. Mortgage payments averaged $10,730 a year. But almost half of all homeowners in 2005 reported having no mortgage and they allocated only 12% of their total spending to shelter. The median age of homeowners without a mortgage was 60, while the median age of homeowners with a mortgage was 44. Renters, however, spent an average $8,720 on shelter — also about 22% of their total spending.

Electronic gadgets and the Internet also helped fuel the spending boom and it seems cellphones are rapidly replacing conventional land-line telephones. For instance, spending on cellphones and other wireless services, while only $410 on average in 2005, was up more than 21% from 2004. At the same time, spending on conventional land-line telephone services dropped by 3% to $680.

Among households with the highest incomes, nearly one quarter had three or more cellphones. Almost 75% of households in Alberta now have cellphones — the highest provincial rate in the country. But Ottawa was the most wireless city, with 81% of households having a cellphone in 2005.

Spending on Internet access jumped by 15% to an average $240. And 50% of households reported high-speed access — up from 43% the year before. Almost all the highest income households now have computers, but only four out of 10 households in the lowest income group had a computer and only one-third had home access to the Internet. British Columbia was the most connected province, StatsCan says, with 70% of households having Internet access at home.

A record 28% of households reported buying new computer hardware in 2005, according to the survey. And DVD players kept up their explosive growth in popularity, the agency says. Almost 80% of households reported having a DVD player in 2005. StatsCan says DVD players have become the most rapidly adopted new technology since television in the 1950s.

The agency reports rising incomes pushed personal taxes up by 6% in 2005, to an average $13,700, but the percentage of spending allocated to taxes held steady at 20% of the average household budget. Spending on shelter averaged 19%, while transportation represented 14% and food 11% of the average budget. But the amounts allocated to the different spending categories vary considerably depending on the household income (see table, above top).

@page_break@To analyze data by income level, StatsCan divided households into five groups or quintiles based on income. Each quintile represents one-fifth of all households.

The one-fifth of households with the lowest income spent about $22,040 in 2005. Almost 51% of this amount went to the essentials of food, clothing and shelter. Personal income taxes represented just 4% of the total budget for these households. At the other end of the income scale, the top one-fifth of households spent an average $135,380 in 2005, with 27% going to food, clothing and shelter and 29% to personal income taxes.

Spending also varies by the type of household (see table above). Couples with children had the highest average spending, while one-person households had the lowest. Rural households spent less on average than those in urban areas. And homeowners spent about double the amounts spent by renters. IE