Falling loonie means higher costs for consumers but gains for some businesses
Alesia Fieldberg, CTV Winnipeg
Published Friday, January 30, 2015 4:59PM CST
Last Updated Friday, January 30, 2015 6:28PM CST
Despite the dropping Canadian dollar, Joanne Dowsett has no plans of dropping her annual holiday.
She's in Arizona this winter, continuing a 10-year tradition.
“I think I would still keep coming. We may have to make it shorter, you never know,” said Dowsett.
She said other snowbirds, however, are considering a change, now that each loonie amounts to less than 80 cents U.S.
“The Canadians down here do discuss the dollar, of course, and there is talk that some people think Vancouver Island could be a good alternative,” she said.
The owner of Journeys Travel agrees. Ron Pradinuk expects to see more bookings of vacations inside Canada this year, as even the sun-spots outside the U.S. begin to rise in price.
“A lot of the tourist destinations, even the Caribbean and Mexico, many of them are based on a U.S. dollar, so that's going to change the pricing for next year," said Pradinuk.
The loonie's been low for a while, but economists say it's the pace that matters. It's fallen nearly 20 per cent in two years, making this the fastest drop in the history of the Canadian dollar.
So prepare to pay more for many groceries.
The creators of an annual Food Price Report plan to release a new forecast for 2015. The one released by University of Guelph’s Food Institute in December doesn’t account for the unprecedented dollar decline, meaning grocers won't be able to absorb the prices.
“No one can actually hedge their way out of this, at all, so eventually food importers will have to pay more,” said professor Sylvain Charlebois.
But what's painful for importers, is profitable for exporters.
“Now, for the first time in six years, some of us will put some profit back in our businesses,” said Jack McLaughlin, the owner of Pal Distributors.
The manufacturer said sales in American dollars will make up for the higher raw material costs, and years of selling at a loss when the loonie was high.
“Canada needs that dollar difference. It's not because we're less productive, it's because our costs in Canada are much higher than they are in the U.S. And the price to get it there is another thing,” said McLaughlin.
The dollar decline might not be over yet. Some experts predict the loonie will hit 77 cents U.S., by mid-year.