Industrial product and raw materials price indexes
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Compared with December, the Industrial Product Price Index (IPPI) rose 0.3% in January, led by petroleum products and primary metals. The Raw Materials Price Index (RMPI) edged up 0.1%, primarily because of higher prices for non-ferrous metals and wood.
Prices for industrial goods increase
Chart description: Prices for industrial goods increase
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 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, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.
Industrial Product Price Index, monthly change
The IPPI increased in January, following a 0.9% decline in December. The advance of the index was largely because of higher prices for petroleum and coal products (+2.1%) and primary metal products (+1.9%).
The increase in petroleum and coal product prices was mostly the result of gasoline (+3.5%). The upward movement of gasoline prices in January was a turnaround, as prices had fallen in the previous five months.
Primary metal prices (+1.9%) rose for the first time since August 2011, pushed higher by copper and copper alloy products (+6.8%), aluminum products (+2.8%) and nickel products (+8.1%). The increase in copper and aluminum prices was largely because of reduced supply, while nickel prices were driven by stronger demand for steel.
Aside from these increases, a few product groups showed some downward movement in January, particularly motor vehicles and other transportation equipment (-0.5%). Motor vehicle prices were affected by the 1.0% appreciation of the Canadian dollar relative to the US dollar.
Some Canadian producers who export their products 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 in January had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.6% instead of 0.3%.
The IPPI excluding petroleum and coal prices was unchanged in January, following a 0.4% decline in December.
12-month change in the Industrial Product Price Index
The IPPI increased 2.3% in January compared with the same month a year earlier, continuing the slowdown in the growth of prices for a fourth consecutive month. Of the 21 major commodity aggregations, 17 were up in January.
Compared with January 2011, the IPPI was pushed upward mainly by higher prices for petroleum and coal products (+11.8%). More modest contributions were made by chemical products (+3.9%) and motor vehicles and other transportation equipment (+1.8%).
Year over year, the growth of petroleum and coal products continued to slow from the most recent high in July 2011.
Compared with January 2011, the IPPI excluding petroleum and coal rose 1.0%, a slightly slower pace than in preceding months.
The advance of the IPPI relative to the same month a year earlier was moderated primarily by a decrease in primary metal products (-4.2%). This third consecutive decline was mainly the result of lower prices for copper and copper alloy products (-12.8%), nickel products (-21.2%) and aluminum products (-5.8%).
In January, the 1.9% year-over-year decline in the value of the Canadian dollar relative to the US dollar contributed to the increase in the IPPI. Without the impact of the exchange rate, the IPPI would have risen 1.9% instead of 2.3%.
Raw Materials Price Index, monthly change
In January, the RMPI rose 0.1%, following a 2.5% decrease in December. The advance was mainly the result of higher prices for non-ferrous metals (+3.6%) and wood (+2.4%).
Prices for raw materials increase slightly
Chart description: Prices for raw materials increase slightly
All the major non-ferrous metal groups except precious metals and radioactive concentrates were up, including copper concentrates (+9.9%) and non-ferrous metal scrap (+3.7%).
The increase in wood products was largely the result of an increase in softwood logs and bolts (+3.0%). A strengthening in demand for wood, notably because there was favourable weather for construction, contributed to the price rise.
The upward movement in the RMPI was moderated by lower prices for mineral fuels (-1.1%). Among mineral fuels, crude oil declined 1.1%, its second consecutive monthly decrease.
The RMPI excluding mineral fuels posted a 1.3% increase in January, its first advance since August 2011.
12-month change in the Raw Materials Price Index
Compared with January 2011, the RMPI was up 4.3%, continuing the slowdown that started in May. The main contributors to the year-over-year advance of the RMPI in January were higher prices for mineral fuels (+12.2%) and animals and animal products (+11.6%). The growth of the RMPI was moderated by non-ferrous metals (-12.3%), which experienced a fourth consecutive decline.
Year over year, the RMPI without mineral fuels fell 2.4% in January, its second consecutive decline.
Available without charge in 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 January 2012 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw materials price indexes for February will be released on March 29.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Statistics Canada's National Contact Centre (toll-free 1-800-263-1136; 613-951-8116; infostats@statcan.gc.ca) or the Media Hotline (613-951-4636), Communications Division.
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