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Industrial product and raw materials price indexes
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In December, the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) fell 0.1% and 1.7% respectively, pulled down by lower petroleum prices.
The IPPI edged down 0.1% after the 0.9% upturn in November. The movement of the index has remained relatively stable since May 2009.
In December, petroleum and coal prices (-1.4%) contributed the most to the decline in the IPPI, while rising prices for primary metal products (+1.2%) tempered the decline in the IPPI.
Excluding petroleum and coal prices, the IPPI remained unchanged, despite the increase in prices for primary metal products. The 0.5% appreciation of the Canadian dollar in relation to the US dollar contributed to a price decrease for a number of products, including motor vehicles and other transport equipment (-0.2%).
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 Canadian dollar in relation to the US 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 registered no change, instead of declining 0.1%.
12-month change: The appreciation of the Canadian dollar is still the main factor in the decline of the IPPI
Year over year, the IPPI fell 0.8% in December, its 10th consecutive decrease. The decline was much smaller than the 2.9% drop observed in November.
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, 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.
The IPPI was mainly pulled down by the prices for motor vehicles and other transportation equipment (-9.1%). Also contributing to the decline, but to a lesser extent, were pulp and paper products (-10.8%), metal fabricated products (-5.3%), electrical and communication products (-5.2%) and chemical products (-2.7%).
On the other hand, rising prices for petroleum and coal products (+24.8%) and primary metal products (+12.0%) moderated the year-over-year decline of the IPPI. After 12 straight declines, these two product groups posted 2 consecutive increases, with a substantial increase in December.
Year over year, prices for products excluding petroleum and coal fell 3.0%, compared with respective declines of 4.7% and 3.6% in October and November.
Since December 2008, the Canadian dollar appreciated 17.1% in relation to its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have risen 3.0% instead of declining 0.8%.
The Raw Materials Price Index declines after two consecutive gains
The Raw Materials Price Index (RMPI) fell 1.7% in December after two consecutive months of moderate growth. Despite December's decline, the RMPI still continued the upward trend begun in January 2009.
In December, the RMPI was pulled down by declining prices for mineral fuels, particularly crude oil (-4.9%). December's decrease of crude oil prices had been preceded by two consecutive increases in October (+5.9%) and November (+2.0%).
The 2.8% rise in prices for non-ferrous metals tempered the decline in the RMPI. Non-ferrous metals registered a fifth consecutive increase, leaving the index 36.6% higher than its level in January 2009. With the exception of declines for radioactive concentrates and precious metals, other metals registered higher prices driven by strong demand. In particular, zinc concentrates (+5.8%) and copper concentrates (+3.2%) contributed the most to the increase in prices for non-ferrous metals.
Excluding mineral fuels, the RMPI posted an increase of 1.1% and continued the upward trend maintained throughout 2009.
From December 2008 to December 2009, raw material prices rose 26.7% as a result of significant price increases for mineral fuels (+57.9%) and non-ferrous metals (+39.3%). Apart from these two groups, all others registered a decline.
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 December 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for January will be released on March 1.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (toll-free 1-888-951-4550; 613-951-4550; fax: 613-951-3117; prices-prix@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | December 2008 | November 2009r | December 2009p | December 2008 to December 2009 | November to December 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 117.1 | 116.3 | 116.2 | -0.8 | -0.1 |
| IPPI excluding petroleum and coal products | 94.32 | 113.5 | 110.1 | 110.1 | -3.0 | 0.0 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 112.9 | 112.4 | 112.1 | -0.7 | -0.3 |
| Fruit, vegetables, feeds and other food products | 5.99 | 115.5 | 117.9 | 118.1 | 2.3 | 0.2 |
| Beverages | 1.57 | 128.5 | 130.7 | 130.5 | 1.6 | -0.2 |
| Tobacco and tobacco products | 0.63 | 223.2 | 223.6 | 223.6 | 0.2 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 122.6 | 120.3 | 120.2 | -2.0 | -0.1 |
| Textile products | 1.58 | 103.4 | 101.5 | 101.5 | -1.8 | 0.0 |
| Knitted products and clothing | 1.51 | 104.6 | 105.0 | 104.8 | 0.2 | -0.2 |
| Lumber and other wood products | 6.30 | 84.3 | 81.2 | 81.4 | -3.4 | 0.2 |
| Furniture and fixtures | 1.59 | 124.1 | 124.3 | 124.2 | 0.1 | -0.1 |
| Pulp and paper products | 7.23 | 117.1 | 104.5 | 104.4 | -10.8 | -0.1 |
| Printing and publishing | 1.70 | 125.4 | 124.1 | 124.0 | -1.1 | -0.1 |
| Primary metal products | 7.80 | 120.4 | 133.2 | 134.8 | 12.0 | 1.2 |
| Metal fabricated products | 4.11 | 136.9 | 129.8 | 129.7 | -5.3 | -0.1 |
| Machinery and equipment | 5.48 | 112.9 | 108.9 | 108.8 | -3.6 | -0.1 |
| Motor vehicles and other transport equipment | 22.16 | 99.5 | 90.6 | 90.4 | -9.1 | -0.2 |
| Electrical and communications products | 5.77 | 97.5 | 92.6 | 92.4 | -5.2 | -0.2 |
| Non-metallic mineral products | 1.98 | 126.6 | 128.4 | 128.4 | 1.4 | 0.0 |
| Petroleum and coal products2 | 5.68 | 182.8 | 231.4 | 228.2 | 24.8 | -1.4 |
| Chemicals and chemical products | 7.07 | 135.4 | 131.6 | 131.7 | -2.7 | 0.1 |
| Miscellaneous manufactured products | 2.40 | 123.5 | 124.9 | 124.8 | 1.1 | -0.1 |
| Miscellaneous non-manufactured products | 0.38 | 299.0 | 233.4 | 232.9 | -22.1 | -0.2 |
| Intermediate goods3 | 60.14 | 120.2 | 120.1 | 120.2 | 0.0 | 0.1 |
| First-stage intermediate goods4 | 7.71 | 124.3 | 132.3 | 134.7 | 8.4 | 1.8 |
| Second-stage intermediate goods5 | 52.43 | 119.6 | 118.2 | 118.0 | -1.3 | -0.2 |
| Finished goods6 | 39.86 | 112.4 | 110.7 | 110.2 | -2.0 | -0.5 |
| Finished foods and feeds | 8.50 | 119.6 | 121.0 | 120.9 | 1.1 | -0.1 |
| Capital equipment | 11.73 | 107.0 | 100.3 | 100.1 | -6.4 | -0.2 |
| All other finished goods | 19.63 | 112.5 | 112.6 | 111.8 | -0.6 | -0.7 |
Table 2
| Relative importance1 | December 2008 | November 2009r | December 2009p | December 2008 to December 2009 | November to December 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 128.2 | 165.2 | 162.4 | 26.7 | -1.7 |
| Mineral fuels | 35.16 | 159.7 | 263.7 | 252.1 | 57.9 | -4.4 |
| Vegetable products | 10.28 | 108.6 | 105.9 | 106.5 | -1.9 | 0.6 |
| Animals and animal products | 20.30 | 111.4 | 106.9 | 107.6 | -3.4 | 0.7 |
| Wood | 15.60 | 81.7 | 76.1 | 76.2 | -6.7 | 0.1 |
| Ferrous materials | 3.36 | 144.8 | 126.0 | 124.3 | -14.2 | -1.3 |
| Non-ferrous metals | 12.93 | 136.5 | 185.1 | 190.2 | 39.3 | 2.8 |
| Non-metallic minerals | 2.38 | 174.2 | 173.5 | 173.4 | -0.5 | -0.1 |
| RMPI excluding mineral fuels | 64.84 | 113.6 | 119.7 | 121.0 | 6.5 | 1.1 |
