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Prices for consumer goods set to go up

Retail sales in December fell 2.2 per cent to $43.2 billion, the largest decline since April 2010 according to Statistics Canada stats released Friday. The drop chases a 1.7 per cent increase in November and fits earlier claims by retail analysts that 2015 was the worst year for the sector since the so-called Great Recession of 2009.

And it might catch up to consumers’ wallets in the near future with low oil prices being offset by the weakened loonie and increased importation costs, says Ed Strapagiel, a Toronto-based retail analyst.

“Right now retailers are facing a challenge in how to pass on their price increases to consumers,” he told Yahoo Canada Finance. “Sure, they’re going to tighten their belts and all that good stuff but its hard to see how they could possibly lower prices anytime soon, they just can’t afford to – they’re already getting squeezed on margin.”

He points to Canadian Tire, which announced this week it’d be “selectively” raising the price of some of its products. The move, which the Canadian brand has prided itself on avoiding, follows similar price bumps by grocery stores.

Consumer goods like vegetables, which are predominantly imported during the winter, saw an 18.2 per cent increase in January 2016 compared to last year at the same time with items like celery and onions leading the pack at 69.9 per cent and 19 per cent respectively. Ultimately, those prices get passed on to consumers regardless of whether they’re dining out or cooking in.

“This also hurts some other lines,” says Strapagiel adding that consumers could see a rise in certain types of clothing and footwear that come in from overseas making it an awkward time to refine your look.

It’s also not an ideal time to buy imported electronics and other big-ticket items like home furnishings, which saw a 0.3 per cent price between December 2015 and January 2016. 

In a sense, it becomes a balancing act for shoppers. Some of the merchandise working its way to big box store shelves right now was purchased at lower price points making it less urgent to up the prices. On the other hand, a turnover to those more expensive goods imported this year could come with higher price tags.  

“If you don’t need it right now… you could hold out for a month or two,” says Strapagiel. “Sales and specials will always come along eventually by somebody, somewhere – consumers who pay close attention to these can do a little better.”

All in, the year brought some silver lining for consumers says the retail analyst. 

“One of the big reasons that 2015 looks so bad is the big drop in gas station sales due to low gas prices at the pump,” he says. “We tend to overlook that a bit but certainly consumers have benefited greatly from that.”

In other words, it might be wise to use some of that extra money you’re saving on gas to shop around for those deals now while merchandise purchased by retailers at lower prices a year or more ago is still working its way through the pipelines.

“As time goes on, retailers might be less able to avoid price increases,” adds Strapagiel.