More from the frontlines of C$ surge, aka the US$ collapse:
– I have to question the Star’s dollar headline on its front page today (check your local Star copy or box as it does not appear online). The story is fine, but it’s topped by the ubiquitous pic of a loonie and, in something like 36 point type:
Wow! Electrifying! Just 1.36 shy of par! Wait, wasn’t it 98.65 a week ago? Can’t remember… because that’s such an uninteresting number it could not possibly resonate in anyone’s head. 99.9 is kind of cool. 1.00 is what everyone has internalized already. But 98.64? Not worth the ink.
– Ever-curmudgeonly Andrew Coyne, who is back from a long break and has sadly removed the photo set of his long-ago Whistler ski trip from his blog, is as dismissive as one might hope about the hoopla, calling it “one of the media’s periodic fits of collective insanity.”
That the dollar is rising is newsworthy; that it has hit a 30-year high doubly so, though it is hardly grounds for self-congratulation — it is in large part the result of US economic weakness and the skyrocketing price of oil, neither of which is our doing.
– BMO Nesbitt Burns economist Doug Porter joins the fray, issuing a note further debunking CIBC’s assertion that the dollar’s rise has been keeping inflation in check. He points out that not only is *core* inflation higher in Canada than anywhere else in the developed world, but also:
Canadian CPI inflation for goods has been running on average 1% below its U.S. counterpart for the past three years. That’s a tidy sum for sure, but well below what one may have expected given the average increase of 8% annually in the currency over that time frame.
– And just a short note in defence of booksellers. Having worked both at a bookstore, and at a publisher and distributor, I can tell you that the pricing power of imported books lies mostly with the original publisher. If you buy a Random House book, for example, published by Random House New York, then the distributor, Random House Canada, buys copies of the book from RHNY. It also pays shipping, generally ground, occasionally air. The cost of the books is the list price (the one you see on your book) set by the publisher, less a discount. The invoice is for the books plus freight.
The bookstore, in turn, buys the books from the distributor at the list price less a discount. The standard is 40% for trade books (~45% for some new releases and back catalogue), 20% for books from university presses and textbooks, and 50% for some mass-market titles. The bookstore pays the shipping costs. The bookstore then sells the book to the customer at the list price.
If the publisher has set the Canadian price 25% higher than the US one, and both the Canadian distributor and the bookseller are charged list less discount for the books, it’s impossible for them to break even selling at the US price, since the margin, already small, must also pay for shipping, labour, rent, electricity and marketing.
The price of the book is set long before the book goes to press based on a profit/loss estimate using some forecast of foreign exchange. In this case, this means severely outdated prices on books, which most, though not all, publishers are choosing to hold to even though their costs have now changed. It’s not that hard to put a sticker over the printed price and relabel it — this happens all the time. But in order for everyone to continue to profit from selling books, this is something that has to be initiated by the publisher, not the distributor or the bookseller.