Of all the birds that have been flying south, the loonie looks to be one of them, with local small business owners among the ones feeling the pinch of Canada’s low dollar.
“It definitely affects our business,” said Brian Martin, owner of Precision Power Products of the loonie, which was sitting at 0.76 cents to the U.S. dollar last week. While he notes that St. Paul is far enough away from the U.S. border that it doesn’t have the woes of shoppers hopping the fence to shop, so to speak, the plunging loonie does push product purchases up.
“A lot of people shop online, and they generally see American prices,” he said, noting when they come in to the store, their first question can be why there’s such a big cost difference.
“You usually have some explaining to do,” he said, noting consumers buying in Canadian dollars end up paying more than their neighbours to the south whether they are purchasing online or from a store.
Lee Wiart, a co-owner of Magnet Shoes, says that 95 per cent of the companies she and her husband deal with are increasing prices. The low cost of the loonie hasn’t hurt the business too badly up until now, because it orders product six months up to a year ahead of time, but she anticipates now the dollar “is going to definitely affect us.”
Some clothing suppliers have said they will not to ship some brands to Canada any more because of the low dollar, she said. “So they won’t even try to bring it in and charge a little more, they just totally stopped.”
However, while she is seeing increases in supply costs, she says the store tries hard to find the most reasonably priced products, so that customers don’t see big spikes at the till.
Consumers of course end up paying more for various goods when the loonie is low, for instance, with Statistics Canada noting the cost of food rose 3.4 per cent between June 2014 and 2015. Travel is another item that comes at an increased cost, which is something snowbirds particularly are aware of.
Ed Connor and his wife have a place in Yuma, Arizona, and have been traveling there for the past four years during the winter.
The loonie had peaked at close to $1.10 in 2007, while hovering either below or above parity through 2011 to 2013.
“That was the rolling times. Now it’s the tightening the belt times,” he said with a laugh. The course of the last year and the sink in global oil prices has seen the loonie plunge precipitously, down to 74.06 US cents in September, its lowest levels since 2004.
“The splurging is definitely going to be out,” he said, adding this means perhaps doing a little more cooking at home and a little less dining out. But he and his wife head south with the awareness the dollar is lower than the US greenback. “You know we’re planning this for a year, so you plan, you budget for it. Then you hope for the last day, that the dollar is going to spring up ten cents - but that never happens,” he jokes.
Since oil prices are not expected to recover soon, economic forecasts are for the cheap dollar to stick around for a while. Last week, Scotiabank released its monthly currency forecast, predicting that the loonie will bottom out around 73 cents US by the end of this year, and dip lower in 2016.
Martin and Wiart both note they’ve seen loonie prices slide before, just as they’ve seen oil prices drop before.
“I’m just hopeful it starts to swing back on the upside,” says Martin.
“You just have to be patient,” adds Wiart, who expects people will knuckle through the slower times that will be here for a while yet. “We’ll get through it, we always do.”
