The Price is Wrong

Bitch.

As discussed on R4NT previously here, here and here way back in August 2007 the difference in consumer prices between the US$ and the C$ continues to piss me off.

Back in 2007 I did a little survey of price differences and found quite a few 40%+ differences in prices, at the time retailers complained they couldn't pass the C$ strength through because they had bought their goods with a weaker Canadian dollar. That was an ok explanation, for a while. But how do they explain this report which is out from BMO today:

Canadian shoppers are still paying 18 per cent more on average than Americans for the same items, BMO Nesbitt Burns says in a study that suggests consumers aren't reaping the benefits of a strong dollar.

Perhaps it is because the Canadian dollar hasn't been as strong as we think? Ummm, no:

BMO economist Douglas Porter found the price gap remains large even though the Canadian dollar "has averaged almost parity over the past year - 98.8 cents U.S. to be precise."

98.8% of a US$ over the past year but with a price gap average of 18%. Response retailers?

The Retail Council of Canada, stung by Mr. Porter's report, said Canadian retailers are still at a cost disadvantage for a number of reasons - higher labour costs, higher costs to transport goods over vast distances, labelling requirements and import taxes.

"We in Canada are one-tenth the size of the U.S., so our retailers are not buying products in the same quantities and getting the volume discounts that Americans are," said Derek Nighbor, senior vice-president of national affairs for the council.

Ohhhh I see. It is the damn French labels which are bumping costs up, that and "vast distances". Pretty sure a ton of American labels have Spanish rather than French and while most of the Canadian population is close to the US border, the US population is actually more spread out. Wrong Answer.

Here is the comparison from BMO:

Comparison shopping

Canadian price ($) U.S. price ($U.S.) Price gap (%)
Tim Hortons large coffee & doughnut $2.27 $2.13 7%
Maytag washer & dryer $2,050 $1,699 21%
Bestseller books (6 samples)
Initial price $30.79 $25.30 22%
Discounted $19.27 $15.99 21%
New vehicles
5 mid-range $32,766 $27,485 19%
8 upper end $67,020 $51,423 30%
Nintendo Wii $279.99 $249.99 12%
Coldplay CD $12.99 $9.99 30%
Point & shoot digital cameras (8 samples) $374 $297 26%
BBQs (3 samples) $663 $497 33%
Lawn mowers (2 samples) $484 $369 31%