Gas prices dip to 5-year low, savings could mean higher consumer spending

The drop in crude oil costs has seen prices at gasoline pumps dip to an 5-year low, leaving consumers with money that economists say may be spent elsewhere.

Gas prices dropped to an average of $1.18 across Canada in November, the lowest price since 2009, according to a report from international research group Capital Economics.

The report’s author, Canadian economist David Madani, predicts gasoline prices will drop even lower in December.

The dip at the pumps means most people will have more money to spend on goods and services. Capital Economics expects disposable income to increase by about 1 per cent in the fourth quarter, from Oct. 1 to Dec. 31.

The increase in income will lead to an increase in consumption, according to the report that also notes the final tally hinges on how much Canadians choose to save.

Allowing for some increase in the rate of money saved, the report predicts that Canadian spending will increase by 3 per cent.

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  The drop in crude oil costs has seen prices at gasoline pumps dip to an 5-year low, leaving consumers with money that economists say may be spent elsewhere.