Industrial product and raw materials price indexes
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Between October and November, the Industrial Product Price Index (IPPI) increased slightly, by 0.2%, and the Raw Materials Price Index (RMPI) rose 3.8%, both led by higher petroleum prices.
Prices for industrial goods increase slightly
Chart description: Prices for industrial goods increase slightly
Industrial Product Price Index, monthly change
The IPPI posted a slight increase in November, following a 0.1% decline in October. The index's advance was primarily a result of petroleum and coal products (+1.1%) and, to a lesser extent, motor vehicles and other transportation equipment (+0.3%).
The increase of petroleum and coal products in November was mainly a result of fuel oil and other fuels (+5.5%) and other petroleum and coal products (+1.9%). However, gasoline prices were down 3.6%.
The November increase in prices for motor vehicles and other transportation equipment was mainly attributed to a 0.6% decline in the value of the Canadian dollar relative to the US dollar.
Note to readers
All data in this release are seasonally unadjusted and usually subject to revision for a period of six months (for example, when the July index is released, the index for the previous 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 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 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, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.
Some Canadian producers who export their products are generally paid on the basis of prices set in US dollars. Consequently, the depreciation of the Canadian dollar in relation to the US dollar in November had the effect of increasing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have remained unchanged instead of rising 0.2%.
The advance of the IPPI in November was moderated slightly by eight product groups, including fruit, vegetables and feeds; pulp and paper products; lumber and other wood products; and primary metal products.
Primary metals (-0.1%) decreased for a third consecutive month in November. Lower prices for iron and steel (-1.5%), aluminum (-2.1%) and nickel (-4.8%) resulted in part from weaker demand in Asia and Europe. However, these declines were offset by higher prices for precious metals and copper.
Excluding petroleum and coal prices, the IPPI would have risen 0.1% in November, following a 0.3% decrease in October.
12-month change in the Industrial Product Price Index
The IPPI rose 4.2% in November compared with the same month in 2010, a slowdown from the 5.4% growth observed in September and 4.7% in October. In November, 18 of the 21 major commodity aggregations were up, 1 less than in October.
Relative to November 2010, the IPPI was pushed upward mainly by higher prices for petroleum and coal products (+21.8%). More modest contributions were made by chemical products (+6.7%), motor vehicles and other transportation equipment (+1.5%), fruit, vegetables and feeds (+4.1%) and meat, fish and dairy products (+3.5%).
Year over year, the increase in petroleum and coal products was smaller than the 30.2% observed in September and 25.2% in October.
If petroleum and coal prices were excluded, year over year, the IPPI would have risen 2.1% in November. This was comparable to the growth rate of 2.2% in October.
In November, the 1.3% year-over-year decline in the value of the Canadian dollar relative to the US dollar had a positive effect on the advance of the IPPI. If the exchange rate had been excluded, the IPPI would have increased 3.9% instead of 4.2%.
Raw Materials Price Index, monthly change
In November, the RMPI rose 3.8%, following a 1.0% decline in October. It was led by higher prices for mineral fuels (+8.2%) and non-ferrous metals (+0.9%).
Prices for raw materials increase
Chart description: Prices for raw materials increase
Among mineral fuels, crude oil increased 8.9%, while declines were observed for coal (-1.4%) and natural gas (-0.6%).
In November, precious metals increased 5.6% and copper concentrates rose 2.8%. However, the upward pressure was moderated by nickel concentrates (-4.8%), other base metals (-4.4%) and non-ferrous metal scrap (-2.4%), among others.
RMPI growth in November was dampened by lower prices for vegetable products (-2.5%), including rubber and natural gums (-15.2%), corn (-5.9%) and soybeans (-3.9%).
Without mineral fuels, the RMPI would have posted a 0.3% decline in November, following decreases of 1.1% in September and 2.7% in October.
12-month change in the Raw Materials Price Index
Compared with the same month in 2010, the RMPI rose 11.7% in November, which was comparable to the 11.4% increase in October. The main factors in the year-over-year increase in the RMPI in November were higher prices for mineral fuels (+20.5%), animals and animal products (+17.7%) and vegetable products (+6.7%). The advance was moderated by non-ferrous metals (-5.3%), which had also posted a decrease in October (-4.2%).
Year over year, if mineral fuels were excluded, the RMPI would have risen 4.1% in November. It was the fifth consecutive slowdown in the growth rate since the 19.4% increase in June.
Available on CANSIM: tables 329-0056 to 329-0068 and 330-0007.
Table 329-0056: Industrial Product Price Index by major commodity aggregations.
Table 329-0057: Industrial Product Price Index by industry.
Table 329-0058: Industrial Product Price Index by stage of processing.
Tables 329-0059 to 329-0068: Industrial Product Price Index by commodity.
Table 330-0007: Raw Materials Price Index by commodity.
Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.
The November 2011 issue of Industry Price Indexes (62-011-X, free) will be available soon.
The industrial product and raw materials price indexes for December will be released on January 31.
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: 1-855-314-8765 or 613-951-3117; ppd-info-dpp@statcan.gc.ca), Producer Prices Division.
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