Sliding loonie may mean higher prices for Canadian consumers
Published Saturday, January 25, 2014 10:16PM EST
Some Canadian retailers are warning consumers they can soon expect to pay a lot more for everyday items as the sliding loonie may head lower.
The Canadian dollar on Thursday hit 89.35 cents US, the first time it has dipped below the 90-cent US mark since mid-2009.
"For the end of 2014, I think 90 cents US may be the new normal," personal finance expert Preet Banerjee told CTV News Channel this week.
The impact of the latest drop, triggered by a number of factors including a "deteriorating" Canadian economic outlook, according to Banerjee, may soon hit consumers.
In downtown Toronto, Ponesse Foods owner Mario Aricci, who has been working at the St. Lawrence Market since 1969, says prices for items such as oranges and grapes are higher than they've been in years.
"You know, we're getting it from the weather and the Canadian dollar," Aricci, who orders most of his produce from the U.S., told CTV News.
He says the fluctuating dollar combined with the recent cold snaps in places such as Florida have jacked prices up. Items such as strawberries are costing approximately 30 per cent more, Aricci estimated. Overall, the produce vendor said it's costing him an additional 10 per cent on the exchange, compared to last January when the Canadian dollar was at par.
Nearby Aricci's produce stand, butcher Pat Gasparro of Brown Brothers Meats, agreed that the weakening dollar may soon impact consumers. He said if the loonie continues to tumble, Canadian meat will become more attractive to foreign buyers, meaning consumers at home will have to pay more.
"What's going to happen is as the prices go lower, people from the States, from Hong Kong, they buy our pork, they buy our beef, and that's going to drive the prices up a little bit more," Gasparro told CTV News.
Until now, many retailers say they've been reluctant to pass on the cost of the sliding loonie to consumers, but that may change soon.
Richard Bowden, director of sales at Bay Bloor Radio, said although prices for last year's electronics haven't changed much, he expects that will not be case for the latest models.
"There will be changes in pricing as the new models come out and obviously those will be reflecting the new Canadian dollar," Bowden told CTV News.
And for those looking to escape the bone-chilling temperatures in Canada, the cost of the tumbling loonie has already increased the cost of travel.
On Thursday, Canada's largest tour operator, Transat A.T., confirmed that it is adding a $35 "currency surcharge" to offset the sharp decline of the loonie. The tour operator joined Air Canada Vacations and Sunwing, companies that will be implementing the "currency surcharge" effective Jan. 27 and Jan. 30
"That makes out to about $70 a couple or $140 for a family," said Brad Miron, vice-president of marketing and business development for Travel Brands Inc, which manages Red Tag Vacations.
With a report from CTV News' John Vennavally-Rao