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Industrial product and raw materials price indexes
The price indexes for manufactured goods and raw materials registered lower monthly growth in July than in the previous four months, increasing 0.4% and 1.4% respectively, primarily as a result of the slowdown in the rise of petroleum prices.
From June to July, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), rose 0.4%, down from the average monthly growth rate of 1.5% observed from March to June. The increase in the index in July was almost entirely attributable to a 2.4% rise in the prices for petroleum and coal products, which was the lowest rate in five months.
The prices for products other than petroleum and coal grew 0.1%, down from the 0.9% gain in June. Among these other products, 10 major groups out of 20 posted increases, led by meat, fish and dairy products. On the other hand, prices for motor vehicles and other transport equipment declined.
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 Canadian dollar rose 0.4% in relation to the US dollar in July, after declining 1.7% in June. The relative strength of the Canadian dollar against its US counterpart had a moderating effect on prices, in part because 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 0.5% compared with June instead of increasing 0.4%.
12-month change: industrial prices continue their upward trend for a fourth consecutive month
On a year-over-year basis, the IPPI rose 6.8%, up from the 5.8% increase posted in June, continuing its growth for a fourth consecutive month. Prices for petroleum and coal products were 52.1% higher compared with July 2007 and were the main contributor to the increase in the IPPI.
If petroleum and coal products were excluded, the IPPI would have risen 1.6%, a higher growth rate than the 0.7% recorded in June. Among the other products, chemical products increased 10.9% while fruit, vegetable, feeds and other food products advanced 9.9%. The increases in food products and chemical products were underpinned by rising petroleum and coal product prices in 2007 and 2008.
On a 12-month basis, the Canadian dollar rose 3.6% against the US dollar, and if the direct effect of the exchange rate were excluded, the IPPI would have risen 7.8% instead of 6.8%.
Slower growth for raw material prices after four months of strong increases
The Raw Materials Price Index (RMPI) increased 1.4% in July. This was a slowdown compared with the 4.3% advance in June. The rise of the RMPI was mainly due to a 2.2% increase in the prices for mineral fuels, the lowest advance in five months. If mineral fuels were excluded, the RMPI would have risen 0.2%, registering a first increase after three consecutive monthly declines.
Compared with July 2007, raw materials cost plants 28.9% more, down from the 32.1% increase in June. The rise in the index was mainly attributable to higher prices for mineral fuels and vegetable products, while non-ferrous metals slowed the advance.
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 July 2008 issue of Industry Price Indexes (62-011-XWE, free) will soon be available.
The industrial product and raw material price indexes for August will be released on September 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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