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Industrial product and raw materials price indexes

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June 2010 (Previous release)

The Industrial Product Price Index (IPPI) fell 0.9% in June, led by petroleum and metals. The Raw Materials Price Index (RMPI) declined 0.3%, largely because of lower prices for non-ferrous metals and animals and animal products.

Prices for industrial goods decrease

The downturn in the IPPI came after two consecutive monthly advances. Among the IPPI product groups, nine were down, seven were up, and the remainder were unchanged.

In June, the IPPI decrease was mainly driven by lower prices for petroleum and coal products (-2.3%), primary metal products (-2.9%) and, to a lesser extent, by chemical products (-1.7%) and lumber and other wood products (-2.3%).

Note to readers

All data in this release are seasonally unadjusted and are subject to revision for six months (for example, when the July index is released, the index for the preceding January becomes final).

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 0.2% increase in the value of the Canadian dollar relative to the US dollar had a moderate effect on the IPPI decline. Some Canadian producers who export their products to the United States are generally paid on the basis of 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 fallen 0.8% instead of 0.9%.

Excluding petroleum and coal prices, the IPPI decreased 0.6%, after moving in the opposite direction in the previous two months. The Index has been fairly stable since June 2009.

12-month change in the IPPI: Second consecutive increase

The IPPI was up 0.2% in June compared with the same month a year earlier. It was the second year-over-year increase following more than a year of consecutive declines.

The increase in the IPPI over the past 12 months was largely led by higher prices for primary metal products (+8.4%). There were smaller advances in petroleum and coal products (+2.7%), chemical products (+2.8%) and lumber and other wood products (+2.7%).

The IPPI year-over-year advance was moderated by a decrease in prices for motor vehicles and other transportation equipment (-4.4%). This decline was primarily due to an 8.5% increase in the value of the Canadian dollar relative to the US dollar. If the direct affect of the exchange rate had been excluded, the IPPI would have risen 2.2% instead of 0.2%.

Between June 2009 and June 2010, prices for products excluding petroleum and coal edged down 0.1%, the same rate of decline as in May. The index for this product group has been falling successively on a year-over-year basis since June 2009.

Raw Materials Price Index: Second consecutive monthly decrease

The Raw Materials Price Index (RMPI) was down 0.3% in June following a 7.3% drop in May. It was the second consecutive monthly decrease after four successive gains.

In June, the decline in the RMPI was mainly a result of lower prices for non-ferrous metals (-6.7%) and, to a lesser degree, animals and animal products (-2.2%).

The downward movement in raw materials prices was moderated primarily by a 2.0% increase in mineral fuels prices. Crude oil prices rose 2.4% after falling 14.2% in May.

Excluding mineral fuels, the RMPI fell 2.4% in June following a 1.6% decrease in May.

Between June 2009 and June 2010, raw materials prices edged down 0.1%, their first decline after seven consecutive increases starting in November 2009. In June, mineral fuels prices were down 1.3% year-over-year, while prices for vegetable products dropped 9.5%.

Higher prices for ferrous materials (+18.6%), non-ferrous metals (+3.5%) and animals and animal products (+2.8%) moderated the RMPI year-over-year decrease.

Raw materials prices decline again

Available on CANSIM: tables 329-0038 to 329-0049 and 330-0006.

Tables 329-0040 to 329-0049: Industrial Product Price Index by commodity.

Table 329-0039: Industrial Product Price Index by total commodity aggregation and stage of processing.

Table 329-0038: Industrial Product Price Index by industry.

Table 330-0006: Raw Materials Price Index by commodity.

Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.

The June 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.

The industrial product and raw material price indexes for July will be released on August 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

Industrial product price indexes
  Relative importance1 June 2009 May 2010r June 2010p May to June 2010 June 2009 to June 2010
    (1997=100) % change
Industrial Product Price Index (IPPI) 100.00 116.4 117.6 116.6 -0.9 0.2
IPPI excluding petroleum and coal products 94.32 110.7 111.3 110.6 -0.6 -0.1
Aggregation by commodities            
Meat, fish and dairy products 5.78 113.0 114.0 113.3 -0.6 0.3
Fruit, vegetables, feeds and other food products 5.99 119.4 116.2 116.4 0.2 -2.5
Beverages 1.57 129.9 131.9 131.9 0.0 1.5
Tobacco and tobacco products 0.63 223.6 222.8 222.8 0.0 -0.4
Rubber, leather and plastic fabricated products 3.30 120.0 122.5 123.0 0.4 2.5
Textile products 1.58 102.0 101.5 101.5 0.0 -0.5
Knitted products and clothing 1.51 104.8 103.9 103.9 0.0 -0.9
Lumber and other wood products 6.30 81.0 85.2 83.2 -2.3 2.7
Furniture and fixtures 1.59 124.7 124.7 124.7 0.0 0.0
Pulp and paper products 7.23 106.8 107.6 108.1 0.5 1.2
Printing and publishing 1.70 123.9 123.8 124.0 0.2 0.1
Primary metal products 7.80 124.0 138.4 134.4 -2.9 8.4
Metal fabricated products 4.11 131.5 131.8 131.9 0.1 0.3
Machinery and equipment 5.48 110.7 108.1 107.9 -0.2 -2.5
Motor vehicles and other transport equipment 22.16 93.8 89.9 89.7 -0.2 -4.4
Electrical and communications products 5.77 94.6 91.8 91.4 -0.4 -3.4
Non-metallic mineral products 1.98 128.8 128.9 129.1 0.2 0.2
Petroleum and coal products2 5.68 221.6 233.0 227.6 -2.3 2.7
Chemicals and chemical products 7.07 131.1 137.2 134.8 -1.7 2.8
Miscellaneous manufactured products 2.40 123.2 126.3 126.5 0.2 2.7
Miscellaneous non-manufactured products 0.38 260.6 216.6 211.9 -2.2 -18.7
Intermediate goods3 60.14 119.0 122.3 121.0 -1.1 1.7
First-stage intermediate goods4 7.71 123.8 139.7 134.3 -3.9 8.5
Second-stage intermediate goods5 52.43 118.3 119.6 118.9 -0.6 0.5
Finished goods6 39.86 112.4 110.5 110.2 -0.3 -2.0
Finished foods and feeds 8.50 120.8 121.9 121.6 -0.2 0.7
Capital equipment 11.73 103.0 99.2 99.1 -0.1 -3.8
All other finished goods 19.63 114.5 112.4 111.9 -0.4 -2.3
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 June 2009 May 2010r June 2010p May to June 2010 June 2009 to June 2010
    (1997=100) % change
Raw Materials Price Index (RMPI) 100.00 159.8 160.1 159.6 -0.3 -0.1
RMPI excluding mineral fuels 64.84 117.8 122.0 119.1 -2.4 1.1
Mineral fuels 35.16 250.6 242.4 247.3 2.0 -1.3
Vegetable products 10.28 115.4 102.3 104.4 2.1 -9.5
Animals and animal products 20.30 110.5 116.2 113.6 -2.2 2.8
Wood 15.60 76.6 75.4 75.5 0.1 -1.4
Ferrous materials 3.36 127.6 151.8 151.3 -0.3 18.6
Non-ferrous metals 12.93 161.9 179.5 167.5 -6.7 3.5
Non-metallic minerals 2.38 176.9 174.5 174.9 0.2 -1.1
revised
preliminary
The relative importance is based on the 1997 values of intermediate inputs at December 1996 prices.