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Industrial product and raw materials price indexes
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In March, petroleum and metals caused a surge in manufactured goods and raw materials prices.
From February to March, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), jumped 1.7%, which represents an acceleration compared with the 0.2% rise observed in February, and the strongest increase in the IPPI since the low point reached in October 2007. This increase was driven primarily by the 8.0% jump in the prices for petroleum and coal products, as well as by the strong increase in prices for primary metal products. If energy products were excluded, the IPPI would have increased 0.8%.
Prices of other IPPI products, with the exception of energy, grew stronger compared with February, returning to the December and January growth rates. The upward movement of primary metal product prices accelerated, posting a 5.9% increase, the strongest gain so far in 2008.
On a 12-month basis, the IPPI fell 0.3%, which was less than the 0.7% decline recorded in February. Lower prices for motor vehicles and other transport equipment and for primary metal products were partly offset by the strong rise in petroleum and coal product prices. If energy products were excluded, the IPPI would have shown a steady decline.
The continued strength of the Canadian dollar compared with its US counterpart has had little impact on the movement of prices in March compared with February. The Canadian dollar lost 0.3% of its value compared with the US dollar, after rising 1.2% the previous month. If the exchange rate used to convert these prices had remained unchanged in March, the IPPI would have risen 1.6% compared with February instead of 1.7%, and, on a 12-month basis, the IPPI would have risen 3.7% rather than falling 0.3%.
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) jumped with a month-over-month increase of 6.6% after the 0.6% slowdown recorded in February. The March increase was the strongest since September 1990, which was at 7.9%. This upward pressure was mainly the result of the jump in prices for mineral fuels and to a lesser extent the rise in prices for non-ferrous metals. If mineral fuels were excluded, the RMPI would have risen 1.1%, which was less than the increase for the first two months of the year, which was driven mainly by the rise in non-ferrous metals.
Compared with March 2007, raw materials cost plants 20.4% more. The rise in the index was driven primarily by higher prices for mineral fuels and vegetable products.
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 March 2008 issue of Industry Price Indexes (62-011-XWE, free) will soon be available.
The Industrial product and raw material price indexes for April will be released on May 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.
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