More than three years after the Canadian dollar hit parity with the U.S. greenback, consumers are still complaining that prices in Canada are higher, in some cases dramatically higher.

Nearly 4,000 consumers wrote to the Consumers Association of Canada in the weeks following Christmas about lower prices they’d seen in the U.S.

They cited examples from a broad range of categories: from luxury cars to staples like milk. A kitchen cabinet at Ikea was $479 in Canada but just $299 in the U.S. A baby stroller at Toys R Us was $465 in Canada but just $300 in the U.S.

“We’ve been virtually at parity for 40 months and we have seen no evidence of anyone substantially dropping their prices,” says association president Bruce Cran.

Despite these concerns, Canadians are still doing most of their shopping in Canada, the latest retail sales data out of Statistics Canada shows.

Retail sales in November rose a greater than expected 1.3 per cent in November, the federal agency reported Friday.

Some of those gains may have come at the expense of profits,

“The big November gains may have been partly juiced by Canadian retailers mimicking their U.S. counterparts with Black Friday discounting,” Doug Porter, deputy chief economist at BMO Capital Markets wrote in a note to clients.

Sears Canada, for example, offered to match U.S. advertised prices during the holiday shopping bonanza south of the border known as Black Friday, which fell on Nov. 25 last year.

Porter estimates the gap has shrunk to 15 per cent on average, from a high of 24 per cent the first time the loonie hit parity in November 2007. Inflation in Canada is rising at the same rate as in the U.S., which suggests little price-cutting has occurred here, he says.

Retailers and suppliers say the price gap is shrinking, though some products respond faster than others to changes in exchange rates.

Less competitive or highly regulated products, such as dairy, telecommunications and beer, don’t responding as fast as basic commodities, such as steel, copper and car parts, according to research by Statistics Canada.

On the other hand, U.S.-based retailers, such as teen clothing chain Hollister and accessories store Claire’s, still display two different prices on their tags. A pair of Hollister jeans is $69.50 in Canada but $49.50 in the U.S. A Valentine-themed tank top at Claire’s is $18 in Canada but just $16.50 in the U.S.

Neither retailer responded to requests for an explanation.

Canadian retailers and business owners say the exchange rate is just one factor in the cross-border price differences.

Higher costs in Canada -- payroll, property and sales taxes, along with labour -- make products more expensive regardless of the exchange rate, the Canadian Federation of Independent Business noted.

The Retail Council of Canada also blames higher import duties in Canada, saying they can add as much as 15 per cent to the cost of a product.

The trade association says it’s asked federal finance minister Jim Flaherty to provide some tariff relief in his next budget in March.

Retailers are acutely aware Canadian consumers can vote with their wallets, the council said. The Internet has made it easier to compare cross-border prices and also to shop in the U.S. without leaving home.

In some cases, retailers have responded by making it impossible to access their U.S. website from a computer in Canada.

It hasn’t helped that the recent economic downturn hit the U.S. harder than Canada, forcing retailers and suppliers there to slash their prices to move merchandise.

But consumers wonder how much of a price gap is too much.

Ikea Canada says it has “significantly higher costs” than its U.S. sister chain because the Swedish-owned retailer brings all its North American-bound merchandise through a U.S. port.

The Canadian retailer’s costs for transportation, taxes and duties are as much as 25 per cent higher as a result, said Ikea spokesperson Madeleine Lowenborg-Frick.

As well, the company’s pricing strategy is based on local market conditions, not what the U.S. chain is doing, she said.

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“We don’t look at a chair on the US website and say uh, oh, it’s lower priced. If it’s not a big seller, it’s not meaningful to the consumer,” she said.

When Ikea Canada decided to take $50 million worth of price cuts this year, it focused on its best-selling items, she said.

Among the items recently reduced in price was the popular Ektorp sofa, which fell to $300 from $419 in Canada. It sells for $379 in the U.S.

Currently, some 1,835 of the 8,000 items in its stores are priced at or below their U.S. counterpart, she said.

Still, Canadian consumers suspect retailers on this side of the border of “gouging” them simply because they can.

“The only drops in prices I’ve seen are in the big American stores. Costco and Walmart. Twenty-four months ago they dropped some prices on magazine,” says Cran. “It was a drop in the bucket. There was no groundswell change in price.

Theoretically, under the “one price law,” all things being equal, prices should eventually equalize, said Philip Cross, chief executive officer of Statistics Canada.

But consumers want to know how long is long enough.

When the loonie soared past the U.S. dollar for the first time in three decades on Nov. 7, 2007, retailers said they needed more time to adapt. They couldn’t lower prices on imported merchandise they had ordered 12 to 18 months earlier when the dollar was still at 80 cents U.S.

But when the loonie overtook the greenback again this year, consumers began demanding to know why prices still hadn’t budged on many items.

“Until the prices in Canada are on par with U.S. prices, I will be spending much more money in the United States WHERE PRICES ARE much less for most items,” a senior wrote to the consumers’ association. “Our Canadian dollar is at par but the prices sure aren't. So much for ‘free trade.’ I guess that means I am free to shop in the country that gives me the best bang for my buck. I wish it were Canada.”

When it comes to variations in the prices of specific items, the “one price law” doesn’t hold very well because so many other factors are involved, says StatsCan’s Cross.

As consumers suspect, prices reflect what the market will bear, Cross said.

“Hockey tickets will always be more expensive in Canada,” Cross said because Canadians love hockey.

“If you want good discounts, go to an economy that’s been wrecked recently. Ireland would be a good bet right now, or Greece or Iceland,” Cross said. “There’s a lot of good shopping out there.”

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