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Friday, March 30, 2012 

Demise Of The Penny Will See An Increase In Most Prices As Everything Gets 'Rounded Up'

At the moment in Canada, pricing of any item or service allows the seller to divide the dollar price into 100 individual units of currency known as a 'penny' or a 'cent'. The federal Conservatives are abolishing the penny and the new minimum unit of Canadian currency will be the 5 Cent 'Nickel'.

We are told that prices will simply be rounded up or down to accommodate the loss of the penny as a tool in the market place. Trust me, NO PRICES TO THE CONSUMER WILL EVER BE ROUNDED DOWN.

For example ... if your desired item costs $2.51 it will go up to $2.55. Same thing if the price is $2.52. You'll get rounded up to $2.55. There are no businesses in Canada that are going to round anything 'down' because the loss of 1 or 2 or 3 cents a unit, multiplied by thousands of units sold can add up and reduce profit.

In simple terms, and not to belabour the issue, Stephen Harper has allowed a small retail price increase of 2 or 3 cents on billions of Canadian consumer transactions.

It may only be a couple of cents here - a couple of cents there .... but once again .... YOU GET GOUGED.

It's the 'Capitalist Way'!

Businesses that only round up will lose customers.

Try this. Look at a bunch of cash register receipts, about ten, and see what the net difference would be with rounding to the nearest multiple of five. You can do the same to Interac purchases.

You'll notice that you'll be rounding down as often as up and the net difference will be minimal.

The rounding only occurs with cash transactions because of the exchange of specie. Your Interact and credit card transactions will be to the penny since there is no real transfer of specie between the
seller and your banker. All that happens there is the running sub-total of debt or surplus between the two institutions remains a paper record.

Remember what happened in Britain with decimalising the pound. Everyone thought they'd be gouged
when indeed that was not the case.

I remember the Giles cartoon with the phrase decimal diddling.

It shouldn't happen here and anyone who rounds up only will lose my business.

'Up Rounders' will lose my business too ... but I am not as confident as you that we will see the consumer end up with a neutral result.

From what I understand pennies will continue to be legal tender. Collect them now and when you come across someone who rounds up (instead of down) pay them the exact amount before rounding.

I remember being in Argentina years ago when there was a shortage of all coins, everyone rounded up/down - never a problem.

The loss of the penny is a consequence of inflation, which is a tax on the rich. Shouldn't we be celebrating it?

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