The price survey by a leading Canadian economist confirms what many consumers suspect — that nearly four years after the dollar first hit parity, they're still paying a big premium on imported goods.

Canadians are paying more for books, luxury cars, iPods, running shoes, DVDs and even golf balls, according to the study by BMO Nesbitt Burns Inc.

“The cost of a basket of goods has bolted higher again in Canada relative to the U.S.,” BMO deputy chief economist Doug Porter notes in a draft copy obtained by the Star.

The price gap is up sharply from the nearly 7 per cent spread found in his previous survey in July 2009, when the dollar was trading at 92 cents (U.S.), Porter noted. “There has been precious little movement in underlying relative prices in the past two years, despite the currency's record sprint.”

The report comes amid rising complaints from consumers about the higher cost of goods in Canada as our dollar trades above par, closing Thursday just shy of $1.04 (U.S.).

“If our (dollar) is the same, if not better, why are we still paying more?” said Ben Promane, a University of Toronto music student, who had just paid $17 for a book at the Indigo bookstore on Bay St.

That's 13 per cent more than the American price, $15, which was also displayed on the book cover. “It just boggles my mind. I wonder why it's still going on,” Promane said.

Promane said he recently saved $100 on a Marcus Bonna trumpet case by buying it from a U.S. retailer online. In Canada, the case was priced at $450. Even with the $16 shipping fee, it was worth it to buy it across the border, he said.

Retired police officer Boyd Berman, of Brampton, was so enraged by the gap in book prices he brought in U.S. dollars and insisted on paying the U.S. price. The bookseller eventually agreed, he said.

Canadian retailers say they're aware they have to be price competitive or risk losing sales. But they also say they have higher costs than their U.S. counterparts.

Manufacturers and distributors often charge Canadian retailers more than American stores, what's called “country pricing,” said Diane Brisebois, president and CEO of the Retail Council of Canada. “We're getting calls regularly from retailers complaining about this,” she said.

Canadian retailers also pay higher tariffs and duties on some imported products. Designed to protect local manufacturers, many such duties no longer make sense, she said, citing Halloween costumes as an example. “No one makes Halloween costumes in Canada. Yet, we pay 18 per cent tariffs on costumes imported from Asia.”

Retail profits have been rising, she acknowledged, but she said that's because Canadian merchants have become more productive. “At the same time, prices have gone down. Retailers have been passing on the savings. They have to.”

But Porter, who has been tracking the price gap ever since the dollar hit parity in the fall of 2007, says he found the only time the gap shrinks is when the Canadian dollar falls.

Books aren't the only problem, according to his latest report, called Raging Loonie: What it Can and Can Not Do.

Prices are also higher on running shoes (48 per cent), DVDs (28 per cent), the iPod Touch (24 per cent), and luxury cars (16 per cent), the BMO survey found.

Book publishers say prices have been declining since the dollar took flight. Even when the price on the cover remains higher, many retailers and publishers have agreed to charge a discounted price, said Jacqueline Hushion, executive director for external relations at the Canadian Publishers' Council.

Consumers first began complaining about the price gap nearly four years ago when the loonie hit parity with the U.S. greenback for the first time in three decades. Porter found prices were on average 24 per cent higher in Canada at that time.

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The gap narrowed to 18 per cent a year later as Canadian consumers voted with their wallets and spent more of their money in the U.S.

But after hitting a low of 6.8 per cent, when the loonie fell to 92 cents (U.S.), they have begun climbing again, Porter said.

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