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Industrial product and raw materials price indexes
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The Industrial Product Price Index (IPPI) increased 1.0% and the Raw Materials Price Index (RMPI) rose 2.2% in November, mainly as a result of higher prices for petroleum and metals.
The IPPI rebounded with an increase of 1.0% in November, following two consecutive months of decline. The advance in industrial prices was the strongest since June 2008.
The IPPI was mainly pushed up by higher prices for petroleum and coal products (+4.9%) and primary metal products (+1.6%). Of the 21 major product groups, only 1 registered a price decline.
Excluding petroleum and coal prices, the IPPI advanced 0.5% in November, which was the first rise in this index since March 2009. Part of the increase in these products was due to the 0.4% depreciation of the Canadian dollar 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 strength of the US dollar in relation to the Canadian dollar had the effect of increasing the corresponding prices in Canadian dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.8% instead of 1.0%.
The change in the exchange rate had the effect of raising the prices of motor vehicles and other transport equipment (+0.4%).
Smaller contributions were also noted in all other products, especially fruit, vegetables and feed as well as chemical products.
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 indicate their prices in foreign currencies, especially in US dollars, which are then converted into Canadian dollars. In particular, this is the case for motor vehicles, wood pulp, paper and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. But the conversion into Canadian dollars only reflects how respondents provide their prices. Moreover, this is not a measure that takes into account the full effect of exchange rates, since that is a more difficult analytical task.
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 those prices are set on the world market; however, most prices are denominated in Canadian dollars. For this reason, conversion into Canadian dollars has only a minor effect on the calculation of the RMPI. Moreover, the full effect of exchange rates on the RMPI is not measured, since that is a more difficult analytical task.
12-month change: The appreciation of the Canadian dollar contributes to the decline of the Industrial Product Price Index
The IPPI fell 2.8% in November compared with the same month a year earlier, a ninth consecutive year-over-year decrease. The decline was much smaller than the 6.4% drop in October.
The IPPI was pulled down primarily by lower prices for motor vehicles and other transport equipment (-8.1%), pulp and paper products (-10.6%) and chemical products (-6.7%). On the other hand, rising prices for petroleum and coal products (+3.5%) and primary metal products (+4.6%) moderated the decline of the IPPI.
Year over year, prices for products excluding petroleum and coal declined 3.6% in November, compared with a 4.7% drop in October.
Since November 2008, the Canadian dollar has appreciated 15.0% in relation to its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have risen 0.5% instead of declining 2.8%.
Raw Materials Price Index: Upward trend continues
The RMPI continued to rise, up 2.2% in November, after increasing 2.5% in October. Raw material prices continued their upward movement that began in January 2009, sustained by rising prices for mineral fuels and non-ferrous metals.
Mineral fuels prices rose 2.1% in November but the increase was less robust than in October, when they advanced 5.0%.
The 4.8% increase in prices for non-ferrous metals also contributed to the rise of the Raw Materials Price Index. Non-ferrous metals registered a fourth consecutive increase. Most categories of non-ferrous metals were up, except for nickel and radioactive concentrates. The demand for metals was bolstered by stronger economic activity.
Excluding mineral fuels, the RMPI showed an acceleration of growth with a 2.4% increase in November after edging up 0.1% in October. In November, five of the six major groups in this index showed an increase in prices.
From November 2008 to November 2009, raw material prices rebounded with a substantial 9.3% advance, the first increase after 13 consecutive declines. The increase in raw material prices was mainly attributable to mineral fuels (+16.1%) and non-ferrous metals (+28.8%). However, the year-over-year increase in raw material prices was tempered by declines in all the other major groups, especially animals and animal products.
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 November 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The Industrial product and raw material price indexes for December 2009 will be released on January 29.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (toll-free 1-866-230-2248; 613-951-3902; fax: 613-951-3117; prices-prix@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | November 2008 | October 2009r | November 2009p | November 2008 to November 2009 | October to November 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 119.8 | 115.3 | 116.4 | -2.8 | 1.0 |
| IPPI excluding petroleum and coal products | 94.32 | 114.2 | 109.6 | 110.1 | -3.6 | 0.5 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 113.1 | 111.9 | 112.4 | -0.6 | 0.4 |
| Fruit, vegetables, feeds and other food products | 5.99 | 115.9 | 117.0 | 117.8 | 1.6 | 0.7 |
| Beverages | 1.57 | 128.7 | 130.6 | 130.7 | 1.6 | 0.1 |
| Tobacco and tobacco products | 0.63 | 223.4 | 223.6 | 223.6 | 0.1 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 122.9 | 120.4 | 120.7 | -1.8 | 0.2 |
| Textile products | 1.58 | 103.2 | 101.5 | 101.5 | -1.6 | 0.0 |
| Knitted products and clothing | 1.51 | 104.6 | 105.0 | 105.0 | 0.4 | 0.0 |
| Lumber and other wood products | 6.30 | 84.8 | 81.1 | 81.3 | -4.1 | 0.2 |
| Furniture and fixtures | 1.59 | 124.1 | 124.4 | 124.4 | 0.2 | 0.0 |
| Pulp and paper products | 7.23 | 116.9 | 104.0 | 104.5 | -10.6 | 0.5 |
| Printing and publishing | 1.70 | 124.8 | 123.3 | 124.1 | -0.6 | 0.6 |
| Primary metal products | 7.80 | 127.3 | 131.0 | 133.1 | 4.6 | 1.6 |
| Metal fabricated products | 4.11 | 137.6 | 130.5 | 130.6 | -5.1 | 0.1 |
| Machinery and equipment | 5.48 | 112.5 | 108.9 | 108.9 | -3.2 | 0.0 |
| Motor vehicles and other transport equipment | 22.16 | 98.6 | 90.2 | 90.6 | -8.1 | 0.4 |
| Electrical and communications products | 5.77 | 96.9 | 92.3 | 92.6 | -4.4 | 0.3 |
| Non-metallic mineral products | 1.98 | 126.7 | 128.6 | 128.6 | 1.5 | 0.0 |
| Petroleum and coal products2 | 5.68 | 223.3 | 220.4 | 231.2 | 3.5 | 4.9 |
| Chemicals and chemical products | 7.07 | 141.3 | 131.1 | 131.8 | -6.7 | 0.5 |
| Miscellaneous manufactured products | 2.40 | 122.6 | 123.8 | 124.9 | 1.9 | 0.9 |
| Miscellaneous non-manufactured products | 0.38 | 275.0 | 237.0 | 233.3 | -15.2 | -1.6 |
| Intermediate goods3 | 60.14 | 124.1 | 118.9 | 120.2 | -3.1 | 1.1 |
| First-stage intermediate goods4 | 7.71 | 131.9 | 130.1 | 132.4 | 0.4 | 1.8 |
| Second-stage intermediate goods5 | 52.43 | 122.9 | 117.2 | 118.3 | -3.7 | 0.9 |
| Finished goods6 | 39.86 | 113.4 | 110.0 | 110.7 | -2.4 | 0.6 |
| Finished foods and feeds | 8.50 | 119.6 | 120.6 | 120.9 | 1.1 | 0.2 |
| Capital equipment | 11.73 | 106.4 | 100.0 | 100.2 | -5.8 | 0.2 |
| All other finished goods | 19.63 | 115.0 | 111.4 | 112.6 | -2.1 | 1.1 |
Table 2
| Relative importance1 | November 2008 | October 2009r | November 2009p | November 2008 to November 2009 | October to November 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 151.3 | 161.7 | 165.3 | 9.3 | 2.2 |
| Mineral fuels | 35.16 | 227.1 | 258.2 | 263.7 | 16.1 | 2.1 |
| Vegetable products | 10.28 | 112.8 | 102.0 | 105.9 | -6.1 | 3.8 |
| Animals and animal products | 20.30 | 112.7 | 105.9 | 106.9 | -5.1 | 0.9 |
| Wood | 15.60 | 81.7 | 76.0 | 76.1 | -6.9 | 0.1 |
| Ferrous materials | 3.36 | 147.6 | 128.8 | 129.6 | -12.2 | 0.6 |
| Non-ferrous metals | 12.93 | 143.6 | 176.5 | 184.9 | 28.8 | 4.8 |
| Non-metallic minerals | 2.38 | 174.0 | 173.9 | 173.4 | -0.3 | -0.3 |
| RMPI excluding mineral fuels | 64.84 | 116.3 | 117.0 | 119.8 | 3.0 | 2.4 |
