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Industrial product and raw materials price indexes
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Petroleum prices increased substantially for a third consecutive month in May, driving up the indexes for manufactured goods and raw materials prices. However, if energy products were excluded, the price movement for both those indexes would have been negative.
From April to May, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.6%, down from the 1.6% increase in April. May's increase was almost entirely attributable to petroleum and coal products, which continued their upward climb with an increase of 8.2%, similar to the rate recorded in the previous two months.
Prices for other IPPI products, with the exception of energy, declined 0.5%, their first decrease after five straight monthly increases. Among non-energy products, 13 major groups out of a total of 20 posted declines, led by primary metal products as well as motor vehicles and other transport equipment.
On a 12-month-basis, the IPPI rose 2.4%, up from the 1.4% rise recorded in April. The strong increase in prices for petroleum and coal products was partly offset by decreases in the prices for primary metal products as well as motor vehicles and other transport equipment. If energy products were excluded, the IPPI would have fallen 1.7%, a much lower decrease than the declines of the previous three months.
The Canadian dollar rose 1.4% in relation to the US dollar in May, after falling 1.2% in April. The relative strength of the Canadian dollar against its US counterpart moderated the movement of industrial prices. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 1.0% compared with April instead of an increase of 0.6%. On a 12-month basis, the Canadian dollar rose 8.7% compared with the US dollar, and excluding the effect of the exchange rate, the IPPI would have risen 4.8% rather than increasing 2.4%.
The Raw Materials Price Index (RMPI) continued its upward trend, but the 3.1% increase in May was the second consecutive month of deceleration, compared with the increases of 5.0% in April and 6.7% in March. The advance of the RMPI in May was mainly driven by strong prices for mineral fuels, which rose significantly for a third consecutive month. If mineral fuels were excluded, the RMPI would have fallen 1.9%, a steeper decline than April's drop of 1.5%.
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. |
Compared with May 2007, raw materials cost plants 27.1% more. The rise in the index was mainly attributable to 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 May 2008 issue of Industry Price Indexes (62-011-XWE, free) will soon be available.
The Industrial product and raw material price indexes for June will be released on July 30.
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, prices-prix@statcan.gc.ca) or Danielle Gouin (613-951-3375, danielle.gouin@statcan.gc.ca), Prices Division.
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