It may seem obvious that this should happen. The Canadian department store sets prices in Canadian dollars and the U.S. department store sets prices in U.S. dollars. The exchange rate fluctuates substantially from day to day and month to month, but most prices in the department stores change infrequently. A numerical example shows how a change in the exchange rate can affect the relative price. Suppose a particular model of television sells for 800 Canadian dollars in Vancouver, and 500 U.S. dollars in San Francisco.
Televisions are cheaper in Vancouver.
Now, televisions are cheaper in San Francisco. But it is not easy to explain why these price differences persist and, in particular, why relative prices track exchange rates over fairly long periods of time. Following up on the numerical example, it might be that for many months or years, the U.S. dollar prices of televisions are lower in Vancouver than in San Francisco. Perhaps the prices differ for the same reason that a quart of milk is cheaper at the large grocery store than at the downtown market. Maybe rents and other costs are higher for the department store in San Francisco than for its counterpart in Vancouver.