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Industrial product and raw materials price indexes
In June, the significant increase in price for petroleum pushed up the price index for manufactured goods by 1.3% from May and 5.4% from a year ago. The price index for raw materials was also affected, rising 4.4% from May and 31.9% from a year ago.
Prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 1.3% between May and June, up from the 0.9% increase a month earlier.
The increase was mainly attributable to higher prices for petroleum and coal products, which rose an additional 6.1% in June. However, this increase was slower than the advances of the previous three months, which were just over 8.0%.
If petroleum and coal products were excluded, the IPPI would have increased by 0.6% between May and June, instead of 1.3%. During the previous month, the IPPI would have declined by 0.3% if petroleum and coal products had been excluded.
The Canadian dollar lost 1.7% of its value in relation to the US dollar in June, after rising 1.4% in May. Some manufacturers set their prices in US dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.8% compared with May instead of 1.3%.
Excluding petroleum and coal products, the biggest contributors to the IPPI increase in June were chemical products, along with motor vehicles and other transport equipment.
12-month change: Industrial prices up sharply
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 IPPI rose 5.4% between June 2007 and June 2008, twice the rate of growth of 2.7% posted in May. The strong increase in prices for petroleum and coal products were tempered by lower prices for motor vehicles and other transport equipment, primary metal products, and lumber and other wood products.
If petroleum and coal products were excluded, the IPPI would have increased by 0.4% compared with June 2007. This was the first year-over-year increase of the IPPI, excluding petroleum and coal products, since September 2007.
On a 12-month basis, the Canadian dollar rose 4.8% compared with the US dollar. Excluding the impact of the exchange rate, the IPPI would have risen 6.7%, rather than 5.4%.
Raw materials prices continue upward trend
The Raw Materials Price Index (RMPI) continued its upward trend with an increase of 4.4% in June, up from the 3.1% rise in May.
The advance of the RMPI in June was driven mainly by strong prices for mineral fuels, mainly crude oil, which rose for a fourth consecutive month. If mineral fuels were excluded, the RMPI would have fallen 1.4% in June, a slower rate of decline than May's drop of 1.9%.
Plants paid 31.9% more for raw materials in June than they did in June 2007. This was a sharper rate of growth than the 12-month change of 27.1% in May.
This increase was mainly attributable to higher prices for mineral fuels, as crude oil prices increased at a faster pace this June than they did in June 2007. If mineral fuels were excluded, prices for raw materials would have fallen 6.2%.
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 June 2008 issue of Industry Price Indexes (62-011-XWE, free) will soon be available.
The industrial product and raw material price indexes for July will be released on August 29.
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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