The Daily. Monday, October 29, 2001

Industrial product and raw materials price indexes

The annual rate of growth in industrial product prices was the same in September as in August. Raw materials prices continued to decline compared with September 2000, their fourth consecutive month of negative growth.

Manufacturers' prices, as measured by the Industrial Product Price Index (IPPI), grew 0.6% in September compared with September 2000; August saw a similar year-over-year gain of 0.6%.

Petroleum and coal product prices fell 9.6% in September compared with September 2000, for a third consecutive month of negative growth. If petroleum and coal product prices were excluded, the IPPI would have risen 1.5% instead of 0.6%.

Note to readers Conversion of indexes to 1997 base year and classification change In October, Statistics Canada will convert its economic series to 1997=100 as its time base. Series for Industrial Product Price Indexes, Raw Materials Price Indexes and the Electric Power Selling Price Indexes are being converted. The release of October data will also include an important classification change. The indexes covering industries based on the 1980 Standard Industrial Classification (SIC) will now be classified using the 1997 North American Industrial Classification System (NAICS). The conversion from SIC to NAICS caused significant breaks in the time series. The indexes will be converted with the Daily release of October 2001 data. The indexes will also be updated using a 1997 weighting pattern. The new series will be on different CANSIM II tables and will have different databank numbers. The existing series, on the 1992 time base, will be terminated with the release of the September 2001 figures.

Price increases for motor vehicles, lumber and meat products were the major contributors to the annual rise in manufacturers' prices. Falling prices for petroleum and coal products, primary metal products and pulp and paper products partly offset the yearly increase.

On a month-to-month basis, industrial prices were up 0.5% from August. Higher prices for motor vehicles and petroleum and coal products were partly offset by lower prices for meat products and lumber products.

Manufacturers paid 9.8% less for their raw materials in September than they did in September 2000. Mineral fuels were responsible for more than half of the decline in the Raw Materials Price Index (RMPI) in September, along with non-ferrous metals and wood products. If mineral fuels were excluded, the RMPI would have declined 3.9% on a year-over-year basis instead of falling 9.8%. These decreases were partly offset by higher prices for vegetable and animal products.

On a monthly basis, raw materials prices were down 2.4% in September from August. Lower prices for mineral fuels and animal products were somewhat offset by higher prices for non-ferrous metals.

The IPPI (1992=100) stood at 129.2 in September, up from a revised 128.5 in August. The RMPI (1992=100) fell to 135.4 in September from a revised 138.8 in August.

Crude oil and lumber prices decline

In the RMPI, crude oil prices were 5.1% lower in September than in August, on expectations of weaker demand. This decrease was not reflected in the IPPI; petroleum and coal product prices were up 3.5% from August.

Lumber and other wood product prices fell 1.3% in September from August. Lower prices for softwood lumber were the major factor behind this monthly decrease, due in part to high inventory and uncertainty in the market. On an annual basis, prices for lumber and other wood products were up 11.1% in September from September 2000.

Exchange rate effect pushes prices up

From August to September, the value of the U.S. dollar strengthened against the Canadian dollar, pushing up prices of commodities that are quoted in U.S. dollars, notably automobiles. The impact on the IPPI was such that if the exchange rate had remained unchanged, the IPPI would have declined 0.1% instead of rising 0.5%.

On a 12-month basis, the influence of the dollar was also evident. The IPPI was up 0.6% in September compared with September 2000, but without the exchange rate effect the IPPI would have fallen 0.9%.

Motor vehicle prices still influences finished goods

Rising prices for motor vehicles pushed year-over-year prices up for finished goods. Prices for tobacco products, meat, fish and dairy products and electrical and communication products also contributed to the 3.3% increase from September 2000.

On a monthly basis, prices for finished goods were up 1.1% from August. Higher prices for motor vehicles and petroleum products were slightly offset by lower prices for meat, fish and dairy products.

"Finished goods" are those generally purchased for the purpose of either consumption or investment. Most of the foods and feeds category ends up in the hands of consumers. Most capital goods are equipment and machinery generally bought as investment by companies, government agencies, or governments. Much of the remainder is bought by consumers.

Prices for input goods continue to decline

Producers of intermediate goods received 1.2% less for their goods in September compared with September 2000. Lower prices for pulp and paper products, primary metals products and petroleum products were the major contributors to this decline. These decreases were partly offset by higher prices for motor vehicles, lumber products and meat, fish and dairy products.

Prices for input goods edged up 0.2% from August. Higher prices for petroleum products and motor vehicles more than offset lower prices for primary metal, lumber and meat, fish and dairy products.

"Intermediate goods," sometimes referred to as "input goods," are goods that are generally bought by manufacturers to be further used in the production process, that is, to make other goods.

Available on CANSIM: tables 3290001-3290012 and 3300001.

The September 2001 issue of Industry price indexes (62-011-XPB, $22/$217) will be available in November.

For more information, or to enquire about the concepts, methods or data quality of this release, contact the Client Services Unit (613-951-9606; fax: 613-951-1539; infounit@statcan.gc.ca) or Danielle Gouin (613-951-3375; danielle.gouin@statcan.gc.ca), Prices Division.

Industrial product price indexes

(1992=100)

Raw materials price indexes

(1992=100)