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The Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) declined 0.5% and 3.8% respectively in July compared with June, mainly due to falling petroleum prices.
July's decrease in the IPPI followed an increase of 0.5% in June. The index registered its lowest level in the past 18 months. Furthermore, it was down 7.0% from the peak reached in August 2008.
The IPPI was pulled down to a large extent by the 5.2% reduction in petroleum and coal prices. The decline in petroleum and coal prices in July followed three consecutive monthly increases, including a substantial 10.8% gain in June.
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.
In July, excluding petroleum and coal prices, the IPPI remained unchanged after declining for three consecutive months. The decreases observed for fruit, vegetables and feed products and for motor vehicles and other transport equipment were offset by increases in other groups, led by lumber and other wood products as well as primary metal products.
The Canadian dollar edged up 0.4% in July in relation to the US dollar. 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 declined 0.4% instead of 0.5%.
Year over year, the IPPI declined 6.9% in July, strengthening the downward trend for a fifth consecutive month.
The IPPI was pulled down mainly by the prices for petroleum and coal products (-41.1%) and primary metal products (-17.7%). This decline in prices was mainly tempered by higher prices for motor vehicles and other transport equipment (+7.9%).
Year over year, the prices for products excluding petroleum and coal fell 1.1% in July following a 0.3% drop in June.
Since July 2008, the Canadian dollar has lost 9.8% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 9.7% instead of 6.9%.
The RMPI fell 3.8% in July, in contrast with increases of 2.2% in May and 6.2% in June.
Prices for mineral fuels fell 6.8% in July, following two consecutive monthly increases, including a 12.4% rise in June. The drop in mineral fuels was mainly due to the 7.2% decrease in the price for crude oil. Excluding mineral fuels, the RMPI declined 0.8%, after rising 0.7% in June.
From July 2008 to July 2009, raw material prices dropped 34.4%, the largest year-over-year decline since 1977, the first year for which this index was calculated. The decrease in raw material prices was attributable to the strong 49.0% price reduction for mineral fuels and, to a lesser extent, to the declines for non-ferrous metals (-15.0%) and vegetable products (-19.8%).
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 2009 issue of Industry Price Indexes (62-011-X, 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: 613-951-2848, prices-prix@statcan.gc.ca), Producer Prices Division.
Relative importance1 | July 2008 | June 2009r | July 2009p | July 2008 to July 2009 | June to July 2009 | |
---|---|---|---|---|---|---|
(1997=100) | % change | |||||
Industrial Product Price Index (IPPI) | 100.00 | 124.5 | 116.5 | 115.9 | -6.9 | -0.5 |
IPPI excluding petroleum and coal products | 94.32 | 112.0 | 110.8 | 110.8 | -1.1 | 0.0 |
Aggregation by commodities | ||||||
Meat, fish and dairy products | 5.78 | 113.2 | 112.9 | 112.8 | -0.4 | -0.1 |
Fruit, vegetables, feeds and other food products | 5.99 | 121.1 | 119.0 | 117.6 | -2.9 | -1.2 |
Beverages | 1.57 | 126.7 | 129.8 | 129.8 | 2.4 | 0.0 |
Tobacco and tobacco products | 0.63 | 220.5 | 223.4 | 223.4 | 1.3 | 0.0 |
Rubber, leather and plastic fabricated products | 3.30 | 118.7 | 120.0 | 120.1 | 1.2 | 0.1 |
Textile products | 1.58 | 100.5 | 102.2 | 102.1 | 1.6 | -0.1 |
Knitted products and clothing | 1.51 | 105.0 | 104.8 | 105.0 | 0.0 | 0.2 |
Lumber and other wood products | 6.30 | 82.1 | 80.3 | 81.0 | -1.3 | 0.9 |
Furniture and fixtures | 1.59 | 123.7 | 124.7 | 124.4 | 0.6 | -0.2 |
Pulp and paper products | 7.23 | 107.2 | 107.7 | 107.6 | 0.4 | -0.1 |
Printing and publishing | 1.70 | 119.6 | 123.8 | 123.7 | 3.4 | -0.1 |
Primary metal products | 7.80 | 151.6 | 124.2 | 124.7 | -17.7 | 0.4 |
Metal fabricated products | 4.11 | 135.7 | 131.5 | 131.6 | -3.0 | 0.1 |
Machinery and equipment | 5.48 | 105.9 | 110.7 | 110.7 | 4.5 | 0.0 |
Motor vehicles and other transport equipment | 22.16 | 86.8 | 93.9 | 93.7 | 7.9 | -0.2 |
Electrical and communications products | 5.77 | 90.3 | 94.4 | 94.2 | 4.3 | -0.2 |
Non-metallic mineral products | 1.98 | 125.3 | 128.6 | 128.6 | 2.6 | 0.0 |
Petroleum and coal products2 | 5.68 | 355.9 | 221.4 | 209.8 | -41.1 | -5.2 |
Chemicals and chemical products | 7.07 | 143.4 | 132.9 | 133.1 | -7.2 | 0.2 |
Miscellaneous manufactured products | 2.40 | 121.9 | 123.4 | 122.8 | 0.7 | -0.5 |
Miscellaneous non-manufactured products | 0.38 | 303.3 | 260.7 | 268.4 | -11.5 | 3.0 |
Intermediate goods3 | 60.14 | 132.4 | 119.3 | 118.7 | -10.3 | -0.5 |
First-stage intermediate goods4 | 7.71 | 156.4 | 123.9 | 125.6 | -19.7 | 1.4 |
Second-stage intermediate goods5 | 52.43 | 128.7 | 118.6 | 117.6 | -8.6 | -0.8 |
Finished goods6 | 39.86 | 112.7 | 112.4 | 111.7 | -0.9 | -0.6 |
Finished foods and feeds | 8.50 | 119.1 | 120.5 | 120.5 | 1.2 | 0.0 |
Capital equipment | 11.73 | 97.0 | 103.0 | 102.7 | 5.9 | -0.3 |
All other finished goods | 19.63 | 119.4 | 114.6 | 113.2 | -5.2 | -1.2 |
Relative importance1 | July 2008 | June 2009r | July 2009p | July 2008 to July 2009 | June to July 2009 | |
---|---|---|---|---|---|---|
(1997=100) | % change | |||||
Raw Materials Price Index (RMPI) | 100.00 | 234.3 | 159.8 | 153.7 | -34.4 | -3.8 |
Mineral fuels | 35.16 | 458.4 | 250.6 | 233.6 | -49.0 | -6.8 |
Vegetable products | 10.28 | 136.6 | 115.3 | 109.6 | -19.8 | -4.9 |
Animals and animal products | 20.30 | 109.5 | 110.5 | 110.3 | 0.7 | -0.2 |
Wood | 15.60 | 81.5 | 76.6 | 76.6 | -6.0 | 0.0 |
Ferrous materials | 3.36 | 181.5 | 127.8 | 128.1 | -29.4 | 0.2 |
Non-ferrous metals | 12.93 | 190.5 | 161.9 | 162.0 | -15.0 | 0.1 |
Non-metallic minerals | 2.38 | 170.8 | 177.2 | 176.8 | 3.5 | -0.2 |
RMPI excluding mineral fuels | 64.84 | 130.7 | 117.8 | 116.8 | -10.6 | -0.8 |