Currency watchers likely cringed in recent days when the Canadian dollar dipped below 70 cents against the U.S. greenback, its lowest point in almost 12 years. Except, perhaps, certain hoteliers, local film-industry workers and those in export industries whose business depends largely on U.S. customers.
So what does that mean to the rest of us? Will our groceries get more expensive, given that much of our fresh food comes from south of the border at this time of year, not to mention the raft of packaged goods that originate out of the U.S.?
The unfortunate part is that few of us will ever know to what level price increases are due to our currency value or other factors, such as drought in California, the variable costs such as labour or simply gouging.
While it has felt good to be paying lower prices for gas in recent days, those cost savings are being swallowed up by incrementally higher prices for other regularly purchased goods.
Readers will likely remember not so long ago when the Canadian dollar, buoyed by a surging resource industry and high demand for our exports, climbed well above the level of its U.S. counterpart. It reached an all-time high of close to $1.10 back in 2007. But did our cost of living go down? Not much.
We recall conversations about the cost of books, for example, which have both Canadian and U.S. prices printed on them. People argued that with a stronger loonie, such items should be priced closer to par. No such luck, as publishing houses in the U.S. chose to simply wait things out until the situation evened itself out. Similar situation with winter fruits and vegetables – the selling price for which didn’t come down to reflect the change in the value of our currency.
In our 2016 reality, border-community residents – many of whom routinely cross the line for lower U.S. prices – are likely thinking twice now that the savings are negligible, if in fact a reality. And Canadian holiday-goers who don’t have seasonal lodging in the States are now hesitant about heading south. Many are choosing more cost-effective vacations such as Mexico, a situation that has been a trend for some years now, especially with the loonie maintaining stability next to the peso in recent years.
The Canadian dollar has rebounded from its previous depths. But with consumers struggling to keep pace with inflation these days, the timing of this latest dollar dive doesn’t help.