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Industrial product and raw materials price indexes
Prices for manufactured products edged up in February, as higher prices for primary metals were partly offset by lower prices for motor vehicles. The growth in raw materials prices was slowed substantially by a drop in crude oil prices.
From January to February, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.1%, a marked slowdown compared with the increases of 1.1% in December and 1.0% in January. The growth in prices for petroleum and coal products slowed considerably after three months of vigorous increases. Excluding petroleum and coal products, the IPPI would have remained unchanged in February.
Strong growth for primary metal products and, to a lesser extent, fruit, vegetables and feed products was largely offset by lower prices for motor vehicles and other transport equipment.
On a 12-month basis, the IPPI fell 0.8% in February. Lower prices for motor vehicles and other transport equipment, as well as primary metal products, were strongly offset by the significant increase in prices for petroleum and coal products. If petroleum and coal products were excluded, the IPPI would have declined 3.6% instead of 0.8%.
The exchange rate, reflecting the ongoing effect of the Canadian dollar's strength in relation to its US counterpart, had a sizable effect on the movement of prices in February. The Canadian dollar rose 1.2% against the US dollar, whereas it declined 0.8% the previous month. If the exchange rate that is used to convert these prices had remained unchanged in February, the IPPI would have risen 0.4% compared with January instead of 0.1%, and on a 12-month basis, the IPPI would have risen 3.4% rather than falling 0.8%.
Note to readersThe Industrial Product Price Index (IPPI) reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including the transportation, wholesale, and retail costs. Canadian producers export many goods. They often quote their prices in foreign currencies, particularly for motor vehicles, pulp and paper products, and wood products. Determining the full effect of fluctuating exchange rates on the IPPI is a difficult analytical task. However, it should be noted that many prices collected to calculate the IPPI are quoted in US dollars and then converted into Canadian dollars. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. The Raw Materials Price Index (RMPI) reflects the prices paid by Canadian manufacturers for key raw materials. Many of these prices are set in a world market. Unlike the IPPI, the RMPI includes goods not produced in Canada. |
The growth of the Raw Materials Price Index (RMPI) slowed with a month-over-month increase of 0.5% following a 3.6% surge in January. Significant increases for vegetable products and non-ferrous metals in February were partly offset by a 1.0% decrease for mineral fuels. Excluding mineral fuels, the RMPI would have risen 2.2%, down slightly from the 2.5% rise posted in January.
Compared with February 2007, raw materials cost plants 14.9% more. The rise in the index was driven primarily by higher prices for mineral fuels and vegetable products. Without mineral fuels, the RMPI would have risen 1.8% rather than 14.9%. However, lower prices for non-ferrous metals and animals and animal products moderated the year-over-year increase.
In February, the IPPI was 115.6 (1997=100), up from January's revised level of 115.5. The RMPI was 190.0 (1997=100), up from January's revised level of 189.1.
Available on CANSIM: tables 329-0038 to 329-0049 and 330-0006.
Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.
The February 2008 issue of Industry Price Indexes (62-011-XWE, free) will soon be available.
The industrial product and raw material price indexes for March will be released on April 30.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-9606, fax: 613-951-1539, prices-prix@statcan.gc.ca), or Danielle Gouin (613-951-3375, danielle.gouin@statcan.gc.ca), Prices Division.
Table(s).