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Industrial product and raw materials price indexes
In February, the Industrial Product Price Index (IPPI) rose 0.4% compared with January, due to both the depreciation of the Canadian dollar against the US dollar and increases in the prices for precious metals and petroleum products. The Raw Materials Price Index (RMPI) advanced 1.7 % compared with January, pushed up by rising crude oil prices.
The IPPI rose 0.4% in February, a modest upturn following the stability in the index in January and the declines of 2.7% and 2.2% recorded in November and December respectively.
Motor vehicles and other transport equipment rose 1.1% as a result of the depreciation of the Canadian dollar in relation to its US counterpart. The prices for primary metal products increased 2.2%, pushed up by precious metals; these have been subject to strong global demand, since they are seen as a hedge in a period of economic uncertainty. Prices for petroleum and coal products advanced 1.2%, a second consecutive monthly increase.
The Canadian dollar lost 1.5% of its value against the US dollar in February. Some Canadian producers who export their products to the United States are generally paid in prices set in US dollars. Consequently, the relative strength of the US dollar in relation to the Canadian dollar had the effect of inflating the corresponding prices in Canadian dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have shown no change compared with January instead of rising 0.4%.
Note to readers
The 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 conversion of prices received in US dollars is based on the average monthly exchange rate (noon spot rate) established by the Bank of Canada, and is available on CANSIM in table 176-0064 (series v37426). Monthly and annual variations in the exchange rate, as described in the text, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1 = US$X).
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.
12-month change shows stability in growth of the IPPI
Year over year, the IPPI grew 1.6% in February, an increase comparable to the 1.4% rise observed in January.
The effect on the IPPI of higher prices for motor vehicles and other transport equipment as well as pulp and other paper products was largely offset by lower prices for petroleum and coal products and primary metal products.
On a 12-month basis, prices for petroleum and coal products fell 27.8%, compared with the 28.4% decline in January. Prices for products excluding petroleum and coal products rose 5.4%, which is similar to the 5.2% increase recorded in January.
The Canadian dollar has lost 19.8% of its value since February 2008, and had the direct effect of the exchange rate been excluded, the IPPI would have declined 5.5% in February instead of increasing 1.6%.
Raw Materials Price Index: growth comparable to that of January
The RMPI posted a month-over-month increase of 1.7% in February, comparable to January's 1.5% rise. This was a second consecutive monthly increase for the RMPI, and almost all the growth in February was attributable to mineral fuels.
Mineral fuels rose 4.8%, up from the 2.4% gain recorded in January. Excluding mineral fuels, the RMPI posted a 0.4% decrease, following the 0.9% rise observed in January. Vegetable products, non-ferrous metals and wood posted the strongest price declines.
From February 2008 to February 2009, raw material prices fell 30.7%, comparable to the variations recorded in December and January. The year-over-year drop in raw material prices was attributable to the strong 45.5% price reduction for mineral fuels and, to a lesser extent, to decreases in prices for non-ferrous metals (-36.1%) and vegetable products (-23.2%).
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 February 2009 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 inquire about the concepts, methods or data quality of this release, contact Client Services (613-951-9606, fax: 613-951-2848, prices-prix@statcan.gc.ca), Prices Division.
Table 1
| Relative importance | February 2008 | January 2009r | February 2009p | February 2008 to February 2009 | January to February 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial product price index (IPPI) | 100.00 | 116.0 | 117.3 | 117.8 | 1.6 | 0.4 |
| IPPI excluding petroleum and coal products | 94.32 | 108.2 | 113.6 | 114.0 | 5.4 | 0.4 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 108.4 | 112.8 | 112.8 | 4.1 | 0.0 |
| Fruit, vegetables, feeds and other food products | 5.99 | 117.9 | 116.7 | 116.1 | -1.5 | -0.5 |
| Beverages | 1.57 | 125.7 | 127.6 | 127.7 | 1.6 | 0.1 |
| Tobacco and tobacco products | 0.63 | 218.2 | 223.5 | 223.6 | 2.5 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 115.9 | 122.1 | 122.2 | 5.4 | 0.1 |
| Textile products | 1.58 | 99.7 | 103.5 | 103.7 | 4.0 | 0.2 |
| Knitted products and clothing | 1.51 | 104.8 | 104.9 | 104.7 | -0.1 | -0.2 |
| Lumber and other wood products | 6.30 | 80.2 | 83.3 | 84.0 | 4.7 | 0.8 |
| Furniture and fixtures | 1.59 | 121.2 | 124.1 | 124.1 | 2.4 | 0.0 |
| Pulp and paper products | 7.23 | 102.7 | 115.7 | 116.2 | 13.1 | 0.4 |
| Printing and publishing | 1.70 | 115.7 | 126.2 | 126.1 | 9.0 | -0.1 |
| Primary metal products | 7.80 | 140.6 | 121.4 | 124.1 | -11.7 | 2.2 |
| Metal fabricated products | 4.11 | 126.1 | 136.4 | 136.5 | 8.2 | 0.1 |
| Machinery and equipment | 5.48 | 104.1 | 112.9 | 113.4 | 8.9 | 0.4 |
| Motor vehicles and other transport equipment | 22.16 | 86.0 | 99.1 | 100.2 | 16.5 | 1.1 |
| Electrical and communications products | 5.77 | 89.1 | 97.4 | 97.9 | 9.9 | 0.5 |
| Non-metallic mineral products | 1.98 | 124.7 | 128.4 | 128.4 | 3.0 | 0.0 |
| Petroleum and coal products1 | 5.68 | 260.3 | 185.7 | 187.9 | -27.8 | 1.2 |
| Chemicals and chemical products | 7.07 | 131.1 | 137.6 | 135.7 | 3.5 | -1.4 |
| Miscellaneous manufactured products | 2.40 | 117.1 | 123.7 | 126.9 | 8.4 | 2.6 |
| Miscellaneous non-manufactured products | 0.38 | 357.8 | 292.5 | 268.0 | -25.1 | -8.4 |
| Intermediate goods2 | 60.14 | 121.5 | 120.3 | 120.5 | -0.8 | 0.2 |
| First-stage intermediate goods3 | 7.71 | 150.4 | 124.0 | 121.8 | -19.0 | -1.8 |
| Second-stage intermediate goods4 | 52.43 | 117.2 | 119.8 | 120.3 | 2.6 | 0.4 |
| Finished goods5 | 39.86 | 107.7 | 112.7 | 113.8 | 5.7 | 1.0 |
| Finished foods and feeds | 8.50 | 116.5 | 119.5 | 119.6 | 2.7 | 0.1 |
| Capital equipment | 11.73 | 95.6 | 106.8 | 107.5 | 12.4 | 0.7 |
| All other finished goods | 19.63 | 111.1 | 113.3 | 115.0 | 3.5 | 1.5 |
Table 2
| Relative importance | February 2008 | January 2009r | February 2009p | February 2008 to February 2009 | January to February 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw materials price index (RMPI) | 100.00 | 190.9 | 130.0 | 132.2 | -30.7 | 1.7 |
| Mineral fuels | 35.16 | 314.7 | 163.6 | 171.5 | -45.5 | 4.8 |
| Vegetable products | 10.28 | 145.9 | 113.6 | 112.1 | -23.2 | -1.3 |
| Animals and animal products | 20.30 | 102.4 | 110.4 | 110.6 | 8.0 | 0.2 |
| Wood | 15.60 | 82.1 | 79.9 | 79.3 | -3.4 | -0.8 |
| Ferrous materials | 3.36 | 151.5 | 149.5 | 149.1 | -1.6 | -0.3 |
| Non-ferrous metals | 12.93 | 216.3 | 139.2 | 138.3 | -36.1 | -0.6 |
| Non-metallic minerals | 2.38 | 161.9 | 173.6 | 174.8 | 8.0 | 0.7 |
| RMPI excluding mineral fuels | 64.84 | 133.6 | 114.5 | 114.0 | -14.7 | -0.4 |
