Industrial product and raw materials price indexes, July 2013
The Industrial Product Price Index (IPPI) rose 0.3% in July, mainly because of higher prices for petroleum and coal products as well as motor vehicles and other transport equipment. The Raw Materials Price Index (RMPI) increased 4.2% as a result of higher prices for crude oil.
Industrial Product Price Index, monthly change
The IPPI posted a second consecutive 0.3% increase in July. Of the 21 major commodity groups, 10 were up, 6 were down and 5 were unchanged.
The advance of the index was primarily attributable to petroleum and coal products (+1.1%), specifically diesel fuel (+2.0%) and gasoline (+1.6%). The IPPI excluding petroleum and coal products was up 0.2%.
Motor vehicles and other transportation equipment (+0.5%) also contributed to the IPPI advance, as there were increases in most subcomponents, particularly motor vehicles (+0.7%), which posted a second consecutive gain. The depreciation of the Canadian dollar against the US dollar in July was largely responsible for this advance.
Some Canadian producers who export their products report their prices in US dollars. Consequently, the 0.9% decrease in the value of the Canadian dollar relative to the US dollar may have had the effect of increasing the IPPI. Without the measurable effect of the exchange rate, the index would have risen 0.1% instead of 0.3%.
To a lesser extent, meat, fish and dairy products (+0.9%) also contributed to the increase of the IPPI, mainly as a result of higher prices for meat products (+1.4%), specifically fresh or frozen pork (+6.6%).
Conversely, the increase of the IPPI was moderated mostly by chemical products (-0.6%) and primary metal products (-0.4%).
The decline in chemical products was largely a result of lower prices for organic industrial chemicals (-2.1%). Precious metal basic manufactured shapes (-4.1%), silver and platinum (-3.0%) and gold and gold alloys in primary forms (-2.5%) were mainly responsible for the decline of primary metals.
Industrial Product Price Index, 12-month change
The IPPI rose 1.4% in the 12-month period ending in July, after posting a 0.5% gain in June.
Compared with July 2012, the advance of the IPPI was mainly attributable to petroleum and coal products (+6.0%), specifically diesel fuel (+6.9%) and gasoline (+6.0%). The IPPI excluding petroleum and coal products was up 0.7% on a year-over-year basis.
Motor vehicles and other transportation equipment (+1.4%) also contributed to the IPPI advance during the 12-month period ending in July. The 2.5% depreciation of the Canadian dollar relative to the US dollar was largely responsible for this gain.
Compared with July 2012, prices for lumber and other wood products increased 4.2%, continuing the upward trend that began in February 2012. The advance was mostly because of softwood lumber (+8.4%).
Among the other product groups that posted gains were meat, fish and dairy products (+2.6%), pulp and paper products (+2.4%) and electrical and communication products (+2.5%).
Compared with July 2012, the rise of the IPPI was moderated largely by primary metal products (-3.6%), mostly as a result of lower prices for other non-ferrous metal products, specifically silver and platinum as well as gold and gold alloys in primary form.
Raw Materials Price Index, monthly change
The RMPI rose 4.2% in July, the third consecutive monthly advance and the largest gain in the index since April 2011. Of the seven major product groups, four were up, two were down and one was unchanged.
The increase of the index was mainly attributable to mineral fuels (+9.1%), specifically crude oil (+9.7%). It was the largest increase for crude oil since August 2012. The RMPI excluding mineral fuels edged down 0.1% in July.
Among other commodity groups that contributed to the advance of the RMPI were wood products (+1.8%) and animals and animal products (+0.6%).
The increase in wood products was mainly attributable to logs and bolts (+2.1%), while the advance in animals and animal products was primarily the result of higher prices for hogs-swine for slaughter (+4.9%).
The growth of the RMPI was slightly moderated by a decline in vegetable products (-2.8%), largely because of lower prices for grain (-7.0%), specifically corn (-15.0%).
Raw Materials Price Index, 12-month change
The RMPI rose 7.6% during the 12-month period ending in July, after advancing 4.0% in June. It was the largest year-over-year increase in the index since November 2011.
The advance of the RMPI was mostly because of higher prices for mineral fuels (+18.6%), specifically crude oil (+19.8%). The RMPI excluding mineral fuels was down 1.1% on a year-over-year basis.
Among other commodity groups that contributed to the year-over-year increase in the RMPI were animals and animal products (+4.2%) and wood products (+6.2%).
Compared with July 2012, the increase of the RMPI was moderated slightly by non-ferrous metals (-6.6%) and vegetable products (-7.0%).
Note to readers
With each release, data for the previous six months may have been revised. The indexes are not seasonally adjusted.
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. This is not a measure that takes the full effect of exchange rates into account.
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 release, 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.
Upcoming changes: Basket update and new classification
Statistics Canada is undertaking two important initiatives for the IPPI and the RMPI programs.
Changes will soon be made in the IPPI and RMPI classification, and the basket will be updated (2010=100). These changes will be made at the end of 2013. For more information, see Upcoming changes.
Table CANSIM table329-0056: Industrial Product Price Index, by major commodity aggregations.
Table CANSIM table329-0057: Industrial Product Price Index, by industry.
Table CANSIM table329-0058: Industrial Product Price Index, by stage of processing.
Tables CANSIM table329-0059 to 329-0068: Industrial Product Price Index, by commodity.
Table CANSIM table330-0007: Raw Materials Price Index, by commodity.
Definitions, data sources and methods: survey numbers survey number2306 and survey number2318.
The July 2013 issue of Industry Price Indexes (Catalogue number62-011-X) will be available soon.
The industrial product and raw materials price indexes for August will be released on September 30.
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; email@example.com) or Media Relations (613-951-4636; firstname.lastname@example.org).
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