Canadian buyers are paying an average of 11 per cent more than Americans for the same goods, the Bank of Canada, Mark Carney said Wednesday.
Testifying before a Senate committee looking at the price difference, Carney said the results of the September bank survey - while showing a significant price difference - were nevertheless an improvement over a similar survey in April that put the difference at 18 percent.
The results were not far in April, the Bank of Montreal study, also conducted in the spring, which evaluated the differences of around 20 percent.
Carney said there could be a number of factors that contribute to the "stickiness" of prices despite currency fluctuations that have seen the loonie trading around par with the U.S. dollar in recent months.
Among those factors are higher taxes, less labor are about 20 percent higher in Canada, a smaller population, higher transport costs and economies of scale that allow retailers south of the border to reduce the costs.
But competition from U.S. retailers does not seem to be a big concern for retailers in Canada, he said, despite the stories of angry Canadians taking their business to the south.
Although the phenomenon of cross-border shopping effect Canadian retailers near the U.S. border, is a minor factor in the overall picture, he said.
"The current scale of cross-border shopping is quite modest, about two percent of retail sales," said Carney.
"The degree of competition that has given rise seems to have been determined to force a faster adjustment of prices to the currency," he added.
Carney also dropped a complaint often cited by the Retail Council of Canada that the fees can add up to 18 percent in import cost of some consumer products.
Last month, Finance Department officials testified that the majority of goods crossing the border are free of rights and duties, where applicable, tend to be small.
Carney said the central bank has not made a detailed analysis of the rates, but expressed the same opinion. "While there are differences between the rates, the differences are not so big," he said.
The Senate committee was asked in September to consider the issue has been a source of irritation among consumers in Canada, who continue to pay significantly higher prices for everything from books to cars and gasoline even though the Canadian dollar high.
In his testimony last month, federal Finance Minister Jim Flaherty told the committee that Canadians have every right to be angry that Americans pay more for the same products. He said he would address the issue of charges if the committee found to be an important factor.
Also in earlier testimony, the committee has said that a price difference there can always be between Canada and the U.S., regardless of the time, retailers have to adjust.
Carney agreed that the cost structure in the Canadian market price could result in a persistent "gap" between the two countries.
Efforts to create a uniform in the U.S. market with the same fees and regulations will help close the gap, he said, but not completely.
"We still have problems with one of the great benefits of this country, its vastness and sparse population and it costs (plus) to the ship," he said.
But Carney said there could be some closure of the gap in the coming years.
"It is lost in the retail sector that the return of square feet in Canada is now higher than in the United States," he said, which could lead to more U.S. retailers located north of the border and increasing competition.
The governor said the bank analyzes the impact of exchange rate fluctuations on prices to calculate the effect on future inflation. He said that as a rule, an increase of 10 percent in Canadian dollar may reduce inflation by 0.4 percent.