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Industrial product and raw materials price indexes
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In January, the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) rose 0.3% and 3.3% respectively, led by a rebound in petroleum prices.
The IPPI posted a 0.3% gain in January, larger than the 0.1% increase in December and smaller than the 1.0% increase in November. It was the third consecutive monthly advance of the IPPI.
In January, petroleum and coal prices rebounded 4.4%, after declining 1.4% in December. Higher prices in this commodity group were the biggest contributor to the IPPI increase, followed by primary metal products (+1.7%).
Excluding petroleum and coal prices, the IPPI edged down 0.1% after two consecutive monthly gains. The increase in primary metal products was offset mainly by a decline in motor vehicles and other transportation equipment (-0.7%). The 1.1% appreciation of the Canadian dollar against the US dollar contributed to a price decrease for a number of products, including motor vehicles.
Some Canadian producers who export their products to the United States are generally paid in prices set in US dollars. Consequently, the 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 risen 0.6% instead of 0.3%.
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, as 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, which 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, as that is a more difficult analytical task.
12-month change: The appreciation of the Canadian dollar is still the main factor in the IPPI decline
The IPPI was down 0.3% in January compared with the same month a year earlier. The index has been posting consecutive year-over-year decreases since March 2009. The largest of those declines occurred in July 2009 (-7.1%).
Over the last 12 months, the IPPI was pulled down primarily by lower prices for motor vehicles and other transportation equipment (-9.5%). Also contributing to the decline, but to a lesser extent, were pulp and paper products (-9.9%), electrical and communication products (-5.5%), metal fabricated products (-5.3%) and machinery and equipment (-4.1%).
On the other hand, rising prices for petroleum and coal products (+28.4%) and primary metal products (+13.4%) moderated the year-over-year decline in the IPPI.
Between January 2009 and January 2010, prices for products excluding petroleum and coal were down 2.8%, the same rate as the year-over-year decline registered in December. It is the eighth consecutive decrease for this group of products.
Since January 2009, the Canadian dollar has gained 17.6% in value against its US counterpart, and, if the direct effect of the exchange rate had been excluded, the IPPI would have risen 3.6% instead of declining 0.3%.
Raw Materials Price Index: Upswing following a one-month decline
The Raw Materials Price Index (RMPI) rebounded 3.3% in January, after a 1.7% decline in December, continuing the upward trend that began in January 2009.
In January, the RMPI was pushed up by rising prices for mineral fuels, particularly crude oil (+5.6%). Crude oil prices had dropped 4.9% in December.
Prices for non-ferrous metals and animals and animal products made smaller contributions to the January increase of the RMPI. Non-ferrous metals registered a sixth consecutive increase. Apart from declines for radioactive concentrates and precious metals, prices for non-ferrous metals were driven higher by strong demand. In particular, copper concentrates (+6.0%), zinc concentrates (+3.0%) and nickel concentrates (+6.9%) were the biggest factors driving the increase in non-ferrous metals prices.
Excluding mineral fuels, the RMPI posted a 1.2% gain in January, nearly the same as December's advance (+1.1%), and continued the upward trend that prevailed throughout 2009.
From January 2009 to January 2010, raw materials prices jumped 29.3% as a result of sharply higher prices for mineral fuels (+62.3%) and non-ferrous metals (+39.6%). All other groups posted 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 January 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for February will be released on March 30.
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; ppd-info-dpp@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | January 2009 | December 2009r | January 2010p | December 2009 to January 2010 | January 2009 to January 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 117.1 | 116.4 | 116.8 | 0.3 | -0.3 |
| IPPI excluding petroleum and coal products | 94.32 | 113.4 | 110.3 | 110.2 | -0.1 | -2.8 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 113.0 | 112.0 | 111.9 | -0.1 | -1.0 |
| Fruit, vegetables, feeds and other food products | 5.99 | 117.2 | 118.2 | 117.8 | -0.3 | 0.5 |
| Beverages | 1.57 | 128.9 | 130.5 | 130.5 | 0.0 | 1.2 |
| Tobacco and tobacco products | 0.63 | 223.5 | 223.6 | 222.5 | -0.5 | -0.4 |
| Rubber, leather and plastic fabricated products | 3.30 | 121.8 | 120.2 | 120.3 | 0.1 | -1.2 |
| Textile products | 1.58 | 103.4 | 101.4 | 101.6 | 0.2 | -1.7 |
| Knitted products and clothing | 1.51 | 104.8 | 105.0 | 105.0 | 0.0 | 0.2 |
| Lumber and other wood products | 6.30 | 82.6 | 81.6 | 81.5 | -0.1 | -1.3 |
| Furniture and fixtures | 1.59 | 124.8 | 124.4 | 124.3 | -0.1 | -0.4 |
| Pulp and paper products | 7.23 | 115.6 | 104.5 | 104.2 | -0.3 | -9.9 |
| Printing and publishing | 1.70 | 126.1 | 124.1 | 124.0 | -0.1 | -1.7 |
| Primary metal products | 7.80 | 121.3 | 135.3 | 137.6 | 1.7 | 13.4 |
| Metal fabricated products | 4.11 | 137.1 | 129.6 | 129.8 | 0.2 | -5.3 |
| Machinery and equipment | 5.48 | 113.1 | 108.8 | 108.5 | -0.3 | -4.1 |
| Motor vehicles and other transport equipment | 22.16 | 99.1 | 90.3 | 89.7 | -0.7 | -9.5 |
| Electrical and communications products | 5.77 | 97.5 | 92.4 | 92.1 | -0.3 | -5.5 |
| Non-metallic mineral products | 1.98 | 128.4 | 128.8 | 129.0 | 0.2 | 0.5 |
| Petroleum and coal products2 | 5.68 | 185.6 | 228.2 | 238.3 | 4.4 | 28.4 |
| Chemicals and chemical products | 7.07 | 134.1 | 133.5 | 132.4 | -0.8 | -1.3 |
| Miscellaneous manufactured products | 2.40 | 124.0 | 125.0 | 124.4 | -0.5 | 0.3 |
| Miscellaneous non-manufactured products | 0.38 | 292.4 | 232.8 | 230.2 | -1.1 | -21.3 |
| Intermediate goods3 | 60.14 | 119.9 | 120.5 | 121.1 | 0.5 | 1.0 |
| First-stage intermediate goods4 | 7.71 | 122.4 | 136.1 | 137.7 | 1.2 | 12.5 |
| Second-stage intermediate goods5 | 52.43 | 119.5 | 118.2 | 118.6 | 0.3 | -0.8 |
| Finished goods6 | 39.86 | 112.9 | 110.2 | 110.3 | 0.1 | -2.3 |
| Finished foods and feeds | 8.50 | 119.9 | 120.9 | 120.9 | 0.0 | 0.8 |
| Capital equipment | 11.73 | 107.0 | 99.8 | 99.3 | -0.5 | -7.2 |
| All other finished goods | 19.63 | 113.3 | 111.8 | 112.3 | 0.4 | -0.9 |
Table 2
| Relative importance1 | January 2009 | December 2009r | January 2010p | December 2009 to January 2010 | January 2009 to January 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 129.7 | 162.4 | 167.7 | 3.3 | 29.3 |
| RMPI excluding mineral fuels | 64.84 | 114.1 | 121.0 | 122.4 | 1.2 | 7.3 |
| Mineral fuels | 35.16 | 163.6 | 252.1 | 265.5 | 5.3 | 62.3 |
| Vegetable products | 10.28 | 113.7 | 107.1 | 105.5 | -1.5 | -7.2 |
| Animals and animal products | 20.30 | 110.4 | 107.6 | 109.5 | 1.8 | -0.8 |
| Wood | 15.60 | 79.9 | 76.2 | 76.2 | 0.0 | -4.6 |
| Ferrous materials | 3.36 | 140.3 | 124.3 | 126.6 | 1.9 | -9.8 |
| Non-ferrous metals | 12.93 | 139.2 | 189.9 | 194.3 | 2.3 | 39.6 |
| Non-metallic minerals | 2.38 | 176.3 | 173.3 | 174.5 | 0.7 | -1.0 |
