Why Do Things (still) Cost More In Canada?


[twitter]The Canadian dollar has been trading within a few points of par with the US dollar for about a year now. That’s long enough for companies to go through old inventory, bring in new and adjust prices for the new world order. While things have changed a bit, magazines, Starbucks and other places that list both US and Canadian pricing are still not where the stock market says it should be. Apple prices in Canada are notoriously out of whack on the currency exchange too.

CBC Radio One‘s Day 6 did an investigation this week to find out why things still cost more in Canada than the US.

It boils down to our standard of living. We have higher minimum wages, we have better benefits and we are a separate country from the US (meaning different import duties).

They also point to different economies of scale, meaning that because of our smaller population size, retailers don’t have the same bulk buying power as they do in the states. Also, our labelling laws (things need to be in french AND english) add costs to producers.

I still don’t buy (all) of the excuses. One example in the show, the price of cars, points to the fact that the laws of supply and demand and consumer preference show that Canadians are just willing to pay more for their vehicles. That’s something to remember when you’re next buying a car – nail the dealer down hard, they’ve artificially inflated the prices vis a vis the currency exchange and cost.

If you’re puzzled as to why things (still) cost more in Canada despite our surgingly strong dollar, have a listen to the show. (The segment is about 23 minutes into the program).

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  2. John February 21, 2011 at 2:36 pm

    My econ prof back in Uni days always said that it was a little unfortunate that both Canada’s and USA’s currencies were called the “dollar”. He said the it created a false expectation that they are, in fact, the same thing, and one is just worth more than that other.

    Because of some of things that you mentioned (import duties, significantly higher shipping costs by item, higher inventory costs by item), there’s a built-in “I’m a Canadian premium” on most items.

    All that being said, I agree, I’m not sure I buy all of the excuses/explanations. I think we’re just trained to pay more than they are in the USA. However, if we continue to see parity, I’m hopeful that we’ll see prices come down some in the months and years ahead.

  3. peckster February 21, 2011 at 4:18 pm

    Makes sense to me but most people just like to think some bad person is taking advantage of them. Human nature, blame someone else, even if you have no idea who they are.

  4. Jon February 5, 2012 at 7:08 pm

    A year later, and nothing has changed. In some places it’s just ridiculous. There’s no reason that the exact same item from the exact same chain should cost 25%-50% or more in Canada. As long as Canada Border Services Agency is protecting the retailers’ racket with taxes and exemptions rather than protecting our country, the gouging will continue.

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