Why prices are not going down while the CAD is going up ?

[tasamy]

Following the financial news, CAD are going up against USD ... crossing 90 cent barrier ...
I was expecting that things that are coming from USA especially grocieries and USA products to be cheaper !
Safeway, Co-op, and other stores are making good money but no save for customers ...
Have a look to Orange prices (Sunkist and Navel) ... Nothing ! Same prices like last year or more ! What do you think ?

[bob0]

probably the same reason why gas prices dont go down when the price of oil falls.... greedy suppliers

[FastFokker]

They are cheaper! I just bought an illegal handgun for $125CND.. a year ago, that same gun would have cost me $150CND!

[ElChico]

Following the financial news, CAD are going up against USD ... crossing 90 cent barrier ...
I was expecting that things that are coming from USA especially grocieries and USA products to be cheaper !
Safeway, Co-op, and other stores are making good money but no save for customers ...
Have a look to Orange prices (Sunkist and Navel) ... Nothing ! Same prices like last year or more ! What do you think ?


One of the first rules about economics is that prices are sticky (slow to react to outside pressures). The rise in the Dollar a could be temporary so the costs of repeated price changes helps this effect. But, more likely the reason for the cost of produce is ....

-prices are set by suppy and demand, not cost of raw materials.

-the large part of the cost of oranges is transportation. The cost of transport has increased with the dollar.

-the price of most goods are set on a contract from the supplier and is only changed once a year.

[Rehan]

Following the financial news, CAD are going up against USD ... crossing 90 cent barrier ...
I was expecting that things that are coming from USA especially grocieries and USA products to be cheaper !
Safeway, Co-op, and other stores are making good money but no save for customers ...
Have a look to Orange prices (Sunkist and Navel) ... Nothing ! Same prices like last year or more ! What do you think ? The US dollar is down about 10% compared to a year ago. So perhaps you're hoping for $0.99/lb oranges from last year to be $0.89/lb this year.

But a lot of the cost of operating a grocery store is not the imported produce, but instead local expenses such as wages, building operation/maintenance costs, advertising, etc...and also transportation, as mentioned above. Those costs have certainly not dropped in the last year. So even if the grocery store's cost of oranges is $0.05/lb lower than last year, the store will still sell them for $0.99/lb because that's the kind of pricing people are used to.

Besides that, you may have noticed that a lot of the produce in stores right now is not from the US but from central america.

[danfromwaterloo]

Following the financial news, CAD are going up against USD ... crossing 90 cent barrier ...
I was expecting that things that are coming from USA especially grocieries and USA products to be cheaper !
Safeway, Co-op, and other stores are making good money but no save for customers ...
Have a look to Orange prices (Sunkist and Navel) ... Nothing ! Same prices like last year or more ! What do you think ?

Case study:

Lets say I run an orange import export business. For the past three or four years I've been selling oranges for $1 each, and each orange costs me $0.75 to buy from Florida. Now, with the rise in the loonie, I can buy an orange for $0.40. That means that I'm making almost twice as much money! Sweet!

Why do I want to change the price on the oranges? The only way I'm going to change my prices is if other competitors start dropping their prices.

This is game theory (my major in university).

Two gas stations are across the street from one another. People will go to whatever gas station has the lower price. Now, if they conspire to keep prices high (and the same), they'll get half of all the business, but there'll be less business in total. If they don't conspire, eventually they'll undercut each other to the point where they CAN'T go any lower and make money. This is the equilibrium point. This equilibrium point has a strong correlation to the cost of the products. After all, if you're buying gas at 50 cents, you're not going to sell it for less than that (excluding loss leaders).

[FastFokker]

I don't know economics very well, but it's been explained to me that a higher CAD to the USD actually hurts Canadian businesses and therefore, Canadians in general, more than the CAD remaining low(er).

[ptxpress]

I don't know economics very well, but it's been explained to me that a higher CAD to the USD actually hurts Canadian businesses and therefore, Canadians in general, more than the CAD remaining low(er).


Well, it helps us buy more internationally, but will hurt Canadian businesses that export to the US and other countries, as their currency can buy less of our goods.

Back on topic: Also keep in mind that the US has a much greater population and likely has greater purchasing power as well.