By Justine Féron
With Canada’s currency hitting a 30-year high and making unprecedented gains against the US dollar, many Canadian shoppers are happily cheering the loonie toward parity.
But what exactly does the Canadian dollar’s skyrocketing value mean for consumers’ pocketbooks? The answer: not much.
Though the loonie is now nearly equal in value to the greenback, you wouldn’t know it by comparing prices of goods in Canada to prices of identical items in the United States. Copies of the popular video game Halo 3 cost 34 per cent more at Canadian Costco stores than at Costco outlets south of the border. Ikea’s Kramfor leather chaise sells for $999 in Canada but just $699 in the United States — a 41 per cent difference.
Worst of all, the hip Prius hybrid is priced 39 per cent higher at Canadian Toyota dealerships than at American outlets. Even when the 2008 Prius’ Canadian price of $29,500 is adjusted to US currency, the compact car costs $8,133 more in Canada than it does in the States, where the Prius retails for $20,950.
This trend is also evident, albeit less pronounced, when the Canadian prices of lower-cost products are compared to prices for the same products in the U.S. Lip gloss at The Body Shop sells for a 16 per cent premium in Canada, a large pepperoni pizza from Domino’s costs 17 per cent more here, and Canadian readers pay 15 per cent more than Americans do for copies of The Catcher in the Rye.
Though the rising value of Canada’s currency spells trouble for the country’s export market and provides few benefits to shoppers here, one group is reaping the rewards of a strong Canadian dollar. Hashmat Khan, a Carleton University economics professor, says importers have a lot to gain from the loonie’s meteoric rise.
“When importers buy goods from the U.S. to sell in Canada, they get much better value for their money if Canada’s dollar is high,” he says.
For example, when the Canadian dollar was worth 67 cents seven years ago, a sweater selling for $100 US would cost $149 Canadian. Today, with the Canadian dollar hovering around 98 cents, that same $100 US sweater would cost an importer just $102.
According to Khan, Canadian consumers who hope to save money as the loonie’s value grows should start mimicking importers by buying consumer goods from the United States.
“I just purchased books online through Barnes & Noble, and I saved several hundred dollars because I bought in American currency,” Khan says. “When the Canadian dollar is high in value, it has greater purchasing power in the U.S. ”
Centretown resident Maggie Lyons is one Canadian who plans to take advantage of that increase in purchasing power. “Forget patriotism,” she says. “I’m taking my money to go on a shopping spree in Buffalo!”