5 Consumer and investment prices adjust

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Prices for consumer goods and services and investment products have also shifted in Quebec and Ontario. Prices for items like furniture, appliances, clothes and shoes have declined since the late 1990s. Asia's low-cost labour gave consumers in Canada access to cheaper products. As Asia increasingly became the source of those products, prices for durable and semi-durable goods fell.

The declines in durables and semi-durables prices were the first in the history of the provincial consumer price indexes for these products (Figure 6). In Quebec and Ontario, durable goods prices levelled off in the late 1990s, and began declining thereafter. Semi-durables followed a similar pattern.

Between 2002 and 2007, durables prices fell an average of 1.2% per year in both Quebec and Ontario (Table 1), while semi-durables declined by 0.7% in Quebec and 1.3% in Ontario. Non- durables prices (notably energy and food) rose quickly over the same period, averaging 3.4% per year in both provinces.

Figure 6
Durable prices in Canada, Quebec and Ontario

Table 1
Average annual prince changes, 2002 to 2007

Prices for investment goods also adjusted as the resource boom led to a higher exchange rate. Prices for machinery, which is primarily imported, fell at an annual average rate of 4.8% in Quebec and 4.7% in Ontario. These declines were offset by strong demand from the resource sector and housing driving up the price of structures, and this raised the cost of capital goods slightly in both provinces.