I'm in Cattle's corner on this one, Them distributers and suppliers must lower prices. Sure they hedge, so do exporters. Hedging can't be too long term though (usually max = one year) and very few hedge their entire forcasts.

There is no reason we shouldn't be seeing across the board drops in all sorts of products. The ones that really irk me are the mass produced items. Something like a HP notebook which Future Shop or Staples buy from Canadain distributers in CDN$ who in turn buy it from HP Canada in CDN$ who's costs and profits are in US$ (for the most part). Everytime the CDN$ goes up HP makes more on the amount paid to them by the distributer.

If a US consumer were to buy that product in Future Shop it can cost hundreds more then he would have paid for it in Circuit City. A year ago, those prices would have been relatively the same.

I don't think any of us doubt that eventually we will have some price parity, but the dramatic rise in the CDN$ calls for some dramatic price concessions.
Productivity is not the main issue here - international price parity is. Whatever the exchange rates happen to be at should result in fair prices across the board.