Canadian consumers shouldn't expect prices to fall to U.S. levels just because the loonie and the greenback are flirting with parity, experts say.
The Canadian dollar, which closed at 99.88 cents US on Tuesday, has been threatening to rise above its American counterpart for a few weeks now. Analysts say it may even be on track to break US$1.10 eventually.
Despite the strong loonie, however, many companies are still charging significantly more for the same product in Canada compared to the U.S.
That's made cross-border shopping trips to the south more attractive, sending larger numbers of Canadians to U.S. stores where they can make the most of the strong loonie.
"Sales tax is way lower, and now with the Canadian dollar almost at par it sort of draws me to cross the border more often," said Laval resident Anna Rigas during such a trip in Plattsburgh, N.Y.
A spokesperson for a local mall in the town says there has been a jump in the number of shoppers frequenting its stores.
"We are experiencing about a 40 per cent increase" in Canadian shoppers, said Joan Lapier. "It continues to trend up."
"I think Canadians are ready to travel and they can come down here and experience great bargains."
Price differences can be impressive in some cases. Montrealer Alexandre de Silva picked up four tires from a U.S. retailer for about $500, including duty. He would pay $800 for the same set of tires in Canada, he said.
Yet experts believe there are good reasons for the persisting price discrepancies.
For one thing, the lag time between a business purchasing and selling its inventory means that months could pass before cross-border shopping trips become less attractive for Canadian shoppers.
For example, the Liquor Control Board of Ontario, one of the world's largest purchasers of alcohol, buys its stock six months in advance.
"They can't adjust the prices instantaneously based on today's exchange rate," said Douglas Porter, deputy chief economist at BMO Capital Markets.
Given enough time, however, he says prices for some Canadian goods should decline.
Other products will remain pricier at home due to a number of factors, said retail analyst David Ian Gray.
"You're always going to get a gap between what's sold in the U.S. stores and what we can get in Canada, where you're dealing with physical retail," he told Â鶹´«Ã½ Channel.
"Our wages are higher, our tax system generally is higher, and even things like real estate," Gray said. "In many cases we're much more urbanized here so the land cost is higher for Canadians. And generally the websites have to align with the local stores.
"That's why you see some gaps."
With a report from CTV's Daniele Hamamdjian and CTV Montreal's Annie DeMelt
