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Industrial product and raw materials price indexes
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The Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) were both down 0.5% in April compared with March, halting their upward movements since the start of the year. The Industrial Product Price Index was mainly pulled down by the appreciation of the Canadian dollar in relation to the US dollar, and the Raw Materials Price Index was affected by lower prices for mineral fuels.
The IPPI fell 0.5% in April, a slight downturn following increases of 0.4% in February and 0.3% in March.
The decline in the IPPI was led by lower prices for motor vehicles and other transport equipment (-2.2%) and pulp and paper products (-2.3%). These two product groups are more affected by fluctuations in the exchange rate.
The Canadian dollar rose 3.3% in April in relation to its US counterpart. Some Canadian producers who export their products to the United States are generally paid in prices set in US dollars. Consequently, the relative weakness of the US dollar in relation to the Canadian dollar had the effect of reducing the corresponding prices in Canadian dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.3% instead of declining 0.5%.
The effect of the appreciation of the Canadian dollar on the IPPI was offset in part by an increase in prices for primary metal products and petroleum and coal products. The prices for metal products were boosted by strong demand, especially from China, although international inventories remained high.
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 it 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 that are not produced in Canada.
Prices for petroleum and coal products rose 1.5% following a 0.3% drop in March. Excluding petroleum and coal products, the IPPI declined 0.6% after two consecutive monthly increases of 0.4%.
12-month change: Strengthening of the decline in the Industrial Product Price Index
Year over year, the IPPI fell 2.2% in April following a 0.1% decrease in March. This was the largest decline since January 2004, when the IPPI fell 3.1%.
The IPPI was pulled down by lower prices for petroleum and coal products (-37.4%) and primary metal products (-14.8%). This decline in prices was partly offset by higher prices for motor vehicles and other transport equipment (+14.4%).
On a 12-month basis, prices for products excluding petroleum and coal rose 3.0%, the weakest increase in this rate in 9 months.
Since April 2008, the Canadian dollar has lost 17.2% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 7.6% instead of 2.2%.
Raw Materials Price Index: First decline after three months of growth
The RMPI posted a month-over-month decline of 0.5% in April, which contrasts with the growth in the first three months of the year, especially the 12.1% increase in March.
Prices for mineral fuels declined 2.5%, after increasing 26.0% in March. Excluding mineral fuels, the RMPI advanced 1.4%, down from the 2.5% increase in March.
A 5.8% increase in prices for non-ferrous metals partially offset the impact of the decrease for mineral fuels on the RMPI.
From April 2008 to April 2009, prices for raw materials fell 31.2%, comparable to the changes recorded since December 2008. The drop in raw material prices was attributable to a strong 45.7% decline for mineral fuels and, to a lesser extent, lower prices for non-ferrous metals (-29.5%) and vegetable products (-15.7%).
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 April 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for May will be released on June 30.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-9606, fax: 613-951-2848, prices-prix@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance | April 2008 | March 2009r | April 2009p | April 2008 to April 2009 | March to April 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 120.1 | 118.0 | 117.4 | -2.2 | -0.5 |
| IPPI excluding petroleum and coal products | 94.32 | 110.2 | 114.2 | 113.5 | 3.0 | -0.6 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 109.5 | 114.3 | 114.7 | 4.7 | 0.3 |
| Fruit, vegetables, feeds and other food products | 5.99 | 118.5 | 116.8 | 117.1 | -1.2 | 0.3 |
| Beverages | 1.57 | 126.4 | 128.8 | 128.7 | 1.8 | -0.1 |
| Tobacco and tobacco products | 0.63 | 220.5 | 223.5 | 223.5 | 1.4 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 116.6 | 122.2 | 122.1 | 4.7 | -0.1 |
| Textile products | 1.58 | 100.2 | 103.0 | 102.6 | 2.4 | -0.4 |
| Knitted products and clothing | 1.51 | 104.8 | 104.3 | 104.3 | -0.5 | 0.0 |
| Lumber and other wood products | 6.30 | 80.2 | 83.2 | 82.3 | 2.6 | -1.1 |
| Furniture and fixtures | 1.59 | 121.8 | 124.3 | 124.3 | 2.1 | 0.0 |
| Pulp and paper products | 7.23 | 105.0 | 116.4 | 113.7 | 8.3 | -2.3 |
| Printing and publishing | 1.70 | 119.6 | 126.0 | 125.5 | 4.9 | -0.4 |
| Primary metal products | 7.80 | 150.4 | 124.6 | 128.1 | -14.8 | 2.8 |
| Metal fabricated products | 4.11 | 129.3 | 135.9 | 134.4 | 3.9 | -1.1 |
| Machinery and equipment | 5.48 | 104.7 | 113.9 | 112.8 | 7.7 | -1.0 |
| Motor vehicles and other transport equipment | 22.16 | 86.8 | 101.5 | 99.3 | 14.4 | -2.2 |
| Electrical and communications products | 5.77 | 89.9 | 98.5 | 97.3 | 8.2 | -1.2 |
| Non-metallic mineral products | 1.98 | 125.3 | 129.2 | 129.2 | 3.1 | 0.0 |
| Petroleum and coal products1 | 5.68 | 303.6 | 187.4 | 190.2 | -37.4 | 1.5 |
| Chemicals and chemical products | 7.07 | 135.7 | 132.4 | 132.9 | -2.1 | 0.4 |
| Miscellaneous manufactured products | 2.40 | 119.1 | 127.6 | 126.1 | 5.9 | -1.2 |
| Miscellaneous non-manufactured products | 0.38 | 342.0 | 254.7 | 233.9 | -31.6 | -8.2 |
| Intermediate goods2 | 60.14 | 126.8 | 120.1 | 119.9 | -5.4 | -0.2 |
| First-stage intermediate goods3 | 7.71 | 158.6 | 120.1 | 123.0 | -22.4 | 2.4 |
| Second-stage intermediate goods4 | 52.43 | 122.0 | 120.1 | 119.4 | -2.1 | -0.6 |
| Finished goods5 | 39.86 | 110.1 | 114.9 | 113.8 | 3.4 | -1.0 |
| Finished foods and feeds | 8.50 | 117.4 | 120.8 | 121.0 | 3.1 | 0.2 |
| Capital equipment | 11.73 | 96.4 | 108.5 | 106.9 | 10.9 | -1.5 |
| All other finished goods | 19.63 | 115.2 | 116.1 | 114.8 | -0.3 | -1.1 |
Table 2
| Relative importance | April 2008 | March 2009r | April 2009p | April 2008 to April 2009 | March to April 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 214.3 | 148.2 | 147.5 | -31.2 | -0.5 |
| Mineral fuels | 35.16 | 387.3 | 215.9 | 210.4 | -45.7 | -2.5 |
| Vegetable products | 10.28 | 136.3 | 113.7 | 114.9 | -15.7 | 1.1 |
| Animals and animal products | 20.30 | 105.1 | 115.2 | 115.6 | 10.0 | 0.3 |
| Wood | 15.60 | 80.8 | 77.9 | 76.3 | -5.6 | -2.1 |
| Ferrous materials | 3.36 | 171.5 | 148.8 | 144.2 | -15.9 | -3.1 |
| Non-ferrous metals | 12.93 | 218.4 | 145.5 | 154.0 | -29.5 | 5.8 |
| Non-metallic minerals | 2.38 | 164.8 | 176.7 | 177.3 | 7.6 | 0.3 |
| RMPI excluding mineral fuels | 64.84 | 134.2 | 116.9 | 118.5 | -11.7 | 1.4 |
