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Industrial product and raw materials price indexes
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In August, the Industrial Product Price Index (IPPI) rose 0.5% and the Raw Materials Price Index (RMPI) was up 3.7% compared with July, mainly as a result of rising petroleum and metal prices.
The August increase in the IPPI followed a 0.6% decline in July. Since May, the level of the index has remained fairly stable, alternating between upward and downward movements of similar size.
The IPPI was pushed up by a 6.2% increase in petroleum and coal prices and a 4.9% rise in prices for primary metal products. Of the 21 major product groups, 4 registered an increase in prices while 13 declined.
Primary metal products rose sharply, especially nickel products (+19.4%), copper and copper alloy products (+12.2%) and aluminum products (+6.6%).
Excluding petroleum and coal prices the IPPI edged down 0.1% in August, a fifth consecutive monthly decline. Increases in the prices for non-ferrous metal products were offset primarily by a decrease in prices for motor vehicles and other transport equipment.
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.
The Canadian dollar rose 3.1% in August 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 risen 1.3% instead of 0.5%.
12-month change: Sixth consecutive decline in the Industrial Product Price Index
Year over year, the IPPI declined 6.7% in August. While this decrease was slightly less than the 7.1% drop observed in July, it was relatively strong in comparison to the six consecutive declines in recent months.
The IPPI was pulled down mainly by the prices for petroleum and coal products (-33.4%) and, to a lesser extent, primary metal products (-11.5%) and chemical products (-10.3%). This decline in prices was mainly offset by an increase in prices for motor vehicles and other transport equipment (+3.0%).
Year over year, the prices for products excluding petroleum and coal declined 2.4%, representing a third consecutive decrease and a strengthening of the downward trend.
Since August 2008, the Canadian dollar lost 3.1% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 7.5% instead of 6.7%.
Raw Materials Price Index: Index rebounds on the strength of prices for crude oil and non-ferrous metals
The RMPI increased 3.7% in August compared with a month earlier, which is of the same magnitude as the 3.9% decline recorded in July.
Prices for mineral fuels rose 6.9%, after falling 6.8% in July. The increase in mineral fuels came mainly from the 8.1% rise in prices for crude oil. The 6.3% increase in prices for non-ferrous metals also contributed to the rise in the RMPI, led by zinc concentrates (+16.7%) and copper and nickel concentrates (+16.0%). Excluding mineral fuels, the RMPI increased 0.8% following a 1.3% decline in July.
From August 2008 to August 2009, raw material prices fell 26.4%, a lesser decline than the 34.5% year over year drop recorded in July. The decrease in raw material prices was attributable to the strong 38.5% price reduction for mineral fuels and, to a lesser extent, to decreases in the prices for vegetable products (-18.8%) and ferrous materials (-29.2%). All of the other major product groups also registered year-over-year price declines.
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 August 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The Industrial product and raw material price indexes for September will be released on October 29.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-9606; fax: 613-951-2848; prices-prix@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | August 2008 | July 2009r | August 2009p | August 2008 to August 2009 | July to August 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 124.6 | 115.7 | 116.3 | -6.7 | 0.5 |
| IPPI excluding petroleum and coal products | 94.32 | 113.2 | 110.6 | 110.5 | -2.4 | -0.1 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 114.7 | 112.9 | 112.9 | -1.6 | 0.0 |
| Fruit, vegetables, feeds and other food products | 5.99 | 119.5 | 117.9 | 118.4 | -0.9 | 0.4 |
| Beverages | 1.57 | 126.8 | 129.8 | 129.7 | 2.3 | -0.1 |
| Tobacco and tobacco products | 0.63 | 221.2 | 223.6 | 223.6 | 1.1 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 120.5 | 120.2 | 119.9 | -0.5 | -0.2 |
| Textile products | 1.58 | 101.1 | 101.8 | 101.6 | 0.5 | -0.2 |
| Knitted products and clothing | 1.51 | 105.0 | 105.0 | 105.0 | 0.0 | 0.0 |
| Lumber and other wood products | 6.30 | 84.4 | 81.3 | 81.2 | -3.8 | -0.1 |
| Furniture and fixtures | 1.59 | 123.9 | 124.4 | 124.4 | 0.4 | 0.0 |
| Pulp and paper products | 7.23 | 110.0 | 107.4 | 105.9 | -3.7 | -1.4 |
| Printing and publishing | 1.70 | 122.1 | 123.9 | 123.3 | 1.0 | -0.5 |
| Primary metal products | 7.80 | 147.6 | 124.5 | 130.6 | -11.5 | 4.9 |
| Metal fabricated products | 4.11 | 137.8 | 131.7 | 131.5 | -4.6 | -0.2 |
| Machinery and equipment | 5.48 | 107.5 | 110.7 | 109.9 | 2.2 | -0.7 |
| Motor vehicles and other transport equipment | 22.16 | 89.2 | 93.7 | 91.9 | 3.0 | -1.9 |
| Electrical and communications products | 5.77 | 91.7 | 94.4 | 93.4 | 1.9 | -1.1 |
| Non-metallic mineral products | 1.98 | 125.4 | 128.5 | 128.4 | 2.4 | -0.1 |
| Petroleum and coal products2 | 5.68 | 334.6 | 209.8 | 222.9 | -33.4 | 6.2 |
| Chemicals and chemical products | 7.07 | 146.9 | 130.3 | 131.8 | -10.3 | 1.2 |
| Miscellaneous manufactured products | 2.40 | 120.6 | 122.7 | 122.3 | 1.4 | -0.3 |
| Miscellaneous non-manufactured products | 0.38 | 316.2 | 268.3 | 248.3 | -21.5 | -7.5 |
| Intermediate goods3 | 60.14 | 132.1 | 118.4 | 119.6 | -9.5 | 1.0 |
| First-stage intermediate goods4 | 7.71 | 155.7 | 124.3 | 130.4 | -16.2 | 4.9 |
| Second-stage intermediate goods5 | 52.43 | 128.6 | 117.5 | 118.0 | -8.2 | 0.4 |
| Finished goods6 | 39.86 | 113.3 | 111.7 | 111.2 | -1.9 | -0.4 |
| Finished foods and feeds | 8.50 | 119.6 | 120.5 | 120.5 | 0.8 | 0.0 |
| Capital equipment | 11.73 | 99.1 | 102.7 | 101.4 | 2.3 | -1.3 |
| All other finished goods | 19.63 | 119.2 | 113.2 | 113.0 | -5.2 | -0.2 |
Table 2
| Relative importance1 | August 2008 | July 2009r | August 2009p | August 2008 to August 2009 | July to August 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 216.3 | 153.4 | 159.1 | -26.4 | 3.7 |
| Mineral fuels | 35.16 | 406.5 | 233.6 | 249.8 | -38.5 | 6.9 |
| Vegetable products | 10.28 | 132.7 | 110.0 | 107.8 | -18.8 | -2.0 |
| Animals and animal products | 20.30 | 111.5 | 110.3 | 107.5 | -3.6 | -2.5 |
| Wood | 15.60 | 81.4 | 75.1 | 75.8 | -6.9 | 0.9 |
| Ferrous materials | 3.36 | 180.9 | 129.1 | 128.0 | -29.2 | -0.9 |
| Non-ferrous metals | 12.93 | 178.8 | 160.8 | 170.9 | -4.4 | 6.3 |
| Non-metallic minerals | 2.38 | 174.2 | 175.8 | 174.1 | -0.1 | -1.0 |
| RMPI excluding mineral fuels | 64.84 | 128.3 | 116.3 | 117.2 | -8.7 | 0.8 |
