Ellen Roseman: Lowering those Canada-U.S. price gaps
- October 3, 2007 4:11 PM |
- By Ellen Roseman
Money Talks is a collection of daily columns from The Business Network, which airs weekday mornings on CBC Radio One at 5:45 a.m. ET (6:15 a.m. ET in N.L.).
By Ellen Roseman, personal finance columnist, Toronto Star
(Listen to the original audio)
Douglas Porter, a Bank of Montreal economist, made waves last month by criticizing the high price of Canadian consumer products compared to identical products sold in the United States. He found a 24 per cent price gap on a basket of assorted goods.
In his report, The Price is Wrong, he said retail prices in Canada have responded to the loonie’s moonshot “with all the speed of a three-toed sloth on a hot summer’s day.” As a result, inflation is higher than it should be and interest rates could be even lower.
So, what can consumers do? How can we persuade companies to adjust more quickly to exchange-rate changes? Here’s my advice.
Check out the U.S.-Canadian price gap on products, such as books and greeting cards, where it’s clearly visible. Then, buy from companies that have lowered prices to reflect the soaring Canadian dollar. If you see a big gap, ask the manufacturer why it’s still there and when it’s coming down.
One of my readers wrote to Carlton Cards about what he thought was a hefty surcharge. The company replied that higher operating costs in Canada – and not the exchange rate – were behind the higher prices. That reader now makes his own cards using his computer. It’s only a folded piece of paper, he told me.
What about cross-border shopping? There’s been an increase in personal limits to $400 for 48 hours, up from $200 before. But you have to tell the truth about what you bought. Getting caught smuggling in U.S. merchandise above your limit can cost you plenty.
Don’t forget the long waits at border crossings and the higher gas prices. And since the last wave of cross-border shopping in the early 1990s, many big U.S. retailers have planted roots in Canada. Passports are now mandatory for airplane trips across borders and soon will be for road trips, as well.
Speaking of road trips, should you buy a U.S.-made car? I’m not sure it’s worthwhile.
Cross-border shopping for vehicles is not simple. You may have to get the car modified, inspected and certified to meet our safety standards – and pay Canadian sales taxes on top of the U.S. taxes paid. Don’t underestimate the paperwork needed to do it properly.
- Ellen Roseman
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