Comparing prices in Canada and the United States

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From time to time, Canadians have complained about paying more for things at home than in the United States, despite a dollar that has been near or even higher than parity with the U.S. dollar.

However, prices in the two countries generally do not equate. Nor do relative prices in the two remain constant when there are large movements in the exchange rate.

Factors other than the exchange rate can influence the price for the same product in different countries. These include transportation costs, trade barriers, market practices and non-traded goods and services.

In relation to prices in the United States, Canadians tend to pay relatively less when the Canadian dollar depreciates, and relatively more when it appreciates.

The principle that prices for goods adjust between nations to reflect the exchange rate may not apply when transport­ation costs are high relative to the value of the good or service, or if certain trade barriers exist.

The issue of pricing parity became a topic of debate as the loonie and greenback traded at or near parity in 2011 and 2012.

Chart 25.2 Exchange rate, United States–Canada
View data source for chart 25.2

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