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Industrial product and raw materials price indexes

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September 2009 (Previous release)

The Industrial Product Price Index (-0.5%) and the Raw Materials Price Index (-1.1%) were both down in September compared with August, mainly as a result of declining petroleum prices.

The decrease in the Industrial Product Price Index (IPPI) in September followed a 0.5% advance in August. Since May, the level of the index has been fairly stable in its movement, alternating between upward and downward movements of similar size.

Prices for industrial goods decline

Petroleum and coal prices declined 2.6% after rising 6.2% in August. Of the 21 major product groups, 11 recorded a price decline while 3 increased. With the exception of petroleum and coal, the other product groups contributed only slightly to the movement of the IPPI.

In September, excluding petroleum and coal prices, the IPPI fell 0.3%, continuing its downward trend with a sixth consecutive decline. Among the most significant decreases were fruit, vegetables and feeds (-1.3%) as well as motor vehicles and other transport equipment (-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 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 0.6% in September 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%.

12-month change: Industrial Product Price Index continues to decline

Year over year, the IPPI fell 6.1% in September compared with declines of 7.1% in July and 6.7% in August.

The IPPI was pulled down mainly by the prices for petroleum and coal products (-32.1%) and, to a lesser extent, chemical products (-9.7%) and primary metal products (-8.1%). This decline in prices was mainly offset by higher prices for motor vehicles and other transport equipment (+2.3%).

Year over year, prices for products excluding petroleum and coal fell 2.1%, which is comparable to the 2.4% decrease observed in August. The downward trend continues with this fourth consecutive decline.

Since September 2008, the Canadian dollar lost 2.2% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 6.7% instead of 6.1%.

Raw Materials Price Index: Index retreats as a result of crude oil and vegetable product prices

The Raw Materials Price Index (RMPI) fell 1.1% in September, which is a marked change from the 3.8% increase posted in August.

The volatile movements of the RMPI are mainly due to fluctuations in prices for mineral fuels, especially crude oil. The price for crude oil fell 1.6% in September, following an 8.1% increase in August.

The 5.1% drop in prices for vegetable products also contributed to the decline in the RMPI. In particular, prices for oilseeds (-14.5%) and grains (-3.2%) fell on forecasts of an abundant crop. The drop in the RMPI was tempered by a 0.7% rise in prices for non-ferrous metals. Excluding mineral fuels, the RMPI declined by 0.6%, following a 0.9% rise in August.

From September 2008 to September 2009, raw material prices fell 21.4%, a smaller decrease than the 26.4% year-over-year decline in August. The drop in raw material prices was attributable to the strong 32.0% price reduction for mineral fuels and, to a lesser extent, a 15.9% drop in prices for vegetable products. All main product groups registered year-over-year price declines.

Raw materials prices are back down

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 September 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.

The industrial product and raw material price indexes for October will be released on November 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

Industrial product price indexes
  Relative importance1 September 2008 August 2009r September 2009p September 2008 to September 2009 August to September 2009
  (1997=100) % change
Industrial Product Price Index (IPPI) 100.00 123.2 116.3 115.7 -6.1 -0.5
IPPI excluding petroleum and coal products 94.32 112.6 110.5 110.2 -2.1 -0.3
Aggregation by commodities            
Meat, fish and dairy products 5.78 113.1 112.7 112.4 -0.6 -0.3
Fruit, vegetables, feeds and other food products 5.99 118.2 118.4 116.9 -1.1 -1.3
Beverages 1.57 126.8 129.7 130.1 2.6 0.3
Tobacco and tobacco products 0.63 221.2 223.6 223.6 1.1 0.0
Rubber, leather and plastic fabricated products 3.30 121.4 119.9 119.9 -1.2 0.0
Textile products 1.58 101.7 101.7 101.7 0.0 0.0
Knitted products and clothing 1.51 105.0 105.0 105.0 0.0 0.0
Lumber and other wood products 6.30 84.3 81.9 81.4 -3.4 -0.6
Furniture and fixtures 1.59 123.9 124.4 124.4 0.4 0.0
Pulp and paper products 7.23 110.7 106.3 106.4 -3.9 0.1
Printing and publishing 1.70 122.3 123.3 123.2 0.7 -0.1
Primary metal products 7.80 142.3 130.9 130.8 -8.1 -0.1
Metal fabricated products 4.11 137.9 131.6 131.0 -5.0 -0.5
Machinery and equipment 5.48 107.8 109.7 109.7 1.8 0.0
Motor vehicles and other transport equipment 22.16 89.4 91.9 91.5 2.3 -0.4
Electrical and communications products 5.77 92.0 93.4 93.2 1.3 -0.2
Non-metallic mineral products 1.98 125.7 128.3 128.3 2.1 0.0
Petroleum and coal products2 5.68 319.7 222.9 217.0 -32.1 -2.6
Chemicals and chemical products 7.07 144.9 131.7 130.9 -9.7 -0.6
Miscellaneous manufactured products 2.40 120.1 122.4 123.1 2.5 0.6
Miscellaneous non-manufactured products 0.38 305.3 248.5 234.3 -23.3 -5.7
Intermediate goods3 60.14 130.1 119.8 119.0 -8.5 -0.7
First-stage intermediate goods4 7.71 150.5 130.5 128.4 -14.7 -1.6
Second-stage intermediate goods5 52.43 127.0 118.1 117.6 -7.4 -0.4
Finished goods6 39.86 112.9 111.2 110.7 -1.9 -0.4
Finished foods and feeds 8.50 119.0 120.6 120.5 1.3 -0.1
Capital equipment 11.73 99.4 101.3 101.1 1.7 -0.2
All other finished goods 19.63 118.5 113.1 112.3 -5.2 -0.7
revised
preliminary
The relative importance is based on the 1997 values of production at December 1996 prices.
This index is estimated for the current month.
Intermediate goods are goods used principally to produce other goods.
First-stage intermediate goods are items used most frequently to produce other intermediate goods.
Second-stage intermediate goods are items most commonly used to produce final goods.
Finished goods are goods most commonly used for immediate consumption or for capital investment.

Table 2

Raw materials price indexes
  Relative importance1 September 2008 August 2009r September 2009p September 2008 to September 2009 August to September 2009
  (1997=100) % change
Raw Materials Price Index (RMPI) 100.00 200.6 159.3 157.6 -21.4 -1.1
Mineral fuels 35.16 361.9 249.8 246.0 -32.0 -1.5
Vegetable products 10.28 122.7 108.8 103.2 -15.9 -5.1
Animals and animal products 20.30 113.1 107.5 107.2 -5.2 -0.3
Wood 15.60 81.9 75.9 76.0 -7.2 0.1
Ferrous materials 3.36 167.2 130.2 129.4 -22.6 -0.6
Non-ferrous metals 12.93 176.2 170.9 172.1 -2.3 0.7
Non-metallic minerals 2.38 175.7 174.6 174.6 -0.6 0.0
RMPI excluding mineral fuels 64.84 126.1 117.5 116.8 -7.4 -0.6
revised
preliminary
The relative importance is based on the 1997 values of intermediate inputs at December 1996 prices.