Industrial product and raw materials price indexes, September 2014
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Released: 2014-10-29
The Industrial Product Price Index (IPPI) decreased 0.4% in September, mainly because of lower prices for energy and petroleum products. The Raw Materials Price Index (RMPI) declined 1.8% in September, largely as a result of lower prices for crude energy products.
Chart 1
Prices for industrial goods decrease
Industrial Product Price Index, monthly change
The IPPI decreased 0.4% in September, after increasing 0.3% in August. Of the 21 major commodity groups, 13 were up, 7 were down and 1 was unchanged.
The decrease in the IPPI was led by lower prices for energy and petroleum products (-1.7%). The decline in this commodity group was mainly due to lower prices for motor gasoline (-1.2%), light fuel oils (-3.0%) and diesel fuel (-2.2%). Diesel fuel has been declining since March 2014. Higher crude oil supplies in North America have exerted downward pressure on prices for refined petroleum products. The IPPI excluding energy and petroleum products edged down 0.1% in September.
Also contributing to the decline in the IPPI in September was primary non-ferrous metal products (-1.9%). The main reason for the decrease was lower prices for unwrought precious metals and precious metal alloys (-4.9%), primarily unwrought silver and silver alloys (-6.9%), unwrought gold and gold alloys (-4.3%) and other unwrought precious metals and precious metals alloys, including platinum group metals (-4.0%). This was the largest decline in unwrought precious metals and precious metal alloys since the 5.6% decline in May 2013.
To a lesser extent, meat, fish and dairy products (-0.3%) also contributed to the decrease in the IPPI. The main reason for the decline was lower prices for meat products (-0.5%), primarily fresh and frozen pork (-2.6%). Higher prices for fresh and frozen beef and veal (+0.9%) tempered the decline for meat products.
Moderating the decrease in the IPPI were higher prices for motorized and recreational vehicles (+0.6%). The increase in this commodity group was mainly due to higher prices for passenger cars and light trucks (+0.7%), motor vehicle engines and motor vehicle parts (+0.4%) as well as aircraft (+0.9%). The increase in the prices of motorized and recreational vehicles was closely linked to the depreciation of the Canadian dollar relative to the US dollar.
Some IPPI prices are reported in US dollars and are converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From August to September, the Canadian dollar decreased 0.8% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have declined 0.5% instead of decreasing 0.4%.
Industrial Product Price Index, 12-month change
The IPPI rose 2.5% during the 12-month period ending in September, following a 2.6% gain in August.
Compared with September 2013, the advance of the IPPI was mainly attributable to meat, fish, and dairy products (+10.2%), specifically fresh and frozen beef and veal (+27.7%) and fresh and frozen pork (+19.1%).
Year over year, prices for motorized and recreational vehicles were up 4.1%, mainly resulting from higher prices for passenger cars and light trucks (+4.1%), motor vehicle engines and motor vehicle parts (+3.1%) as well as aircraft (+8.1%). On a year-over-year basis, prices for motorized and recreational vehicles have been on an upward trend since July 2013.
Chemicals and chemical products (+4.3%) also contributed to the year-over-year increase of the IPPI, primarily as a result of higher prices for petrochemicals (+10.9%), plastic resins (+8.9%) as well as ammonia and chemical fertilizers (+8.0%).
On a year-over-year basis, primary ferrous metal products increased 7.5%, reflecting higher prices for iron and steel basic shapes (+10.3%) as well as wire and other rolled and drawn steel products (+10.5%).
Energy and petroleum products declined 1.0% compared with September 2013. Lower prices for diesel fuel (-4.5%), jet fuel (-4.7%) and motor gasoline (-0.4%) were the main reasons for the decline in this commodity group. Higher prices for asphalt and asphalt products (+6.1%) moderated the decrease. This was the first year-over-year decline for energy and petroleum products since May 2013.
Raw Materials Price Index, monthly change
The RMPI declined 1.8% in September, following a 2.2% decrease in August. It was the third consecutive monthly decrease. Of the six major commodity groups, four were down, one was up and one was unchanged.
Chart 2
Prices for raw materials decrease
Crude energy products (-1.9%) contributed the most to the decline of the RMPI in September, largely as a result of lower prices for conventional crude oil (-1.8%). This was the third straight monthly decline for crude energy products. Abundant supply and slow growth in world oil demand were the main factors exerting downward pressure on crude oil prices. The RMPI excluding crude energy products was down 1.7%.
Animals and animal products (-3.4%) also contributed significantly to the decline of the RMPI, as a result of lower prices for live animals (-5.2%), particularly hogs (-12.3%), which posted its largest decrease since September 2012.
Crop products (-2.3%) were also down in September, as prices declined for a fourth consecutive month. The decrease in this commodity group was primarily due to lower prices for other crop products (-2.4%), mainly oilseeds (except canola), which fell 5.6%, following a 3.5% decline the previous month.
Raw Materials Price Index, 12-month change
The RMPI decreased 0.9% in the 12-month period ending in September, after declining 0.6% in August.
Compared with the same period a year earlier, the decrease in the RMPI was mainly attributable to lower prices for crude energy products (-5.4%), which posted its largest decline since January 2013. Conventional crude oil (-5.5%) was mainly responsible for the decrease in this commodity group. On a year-over-year basis, the RMPI excluding crude energy products was up 4.6%.
Compared with September 2013, crop products (-1.6%) also contributed to the decline in the RMPI, as a result of lower prices for other crop products (-2.7%), canola (-11.6%) and wheat (-6.5%). The decline of crop products was moderated by higher prices for fresh fruit, nuts and vegetables (+13.4%).
The decrease in the RMPI over the 12-month period was moderated primarily by higher prices for animals and animal products (+11.3%), which have been rising on a year-over-year basis since April 2013. Prices for live animals (+20.1%), particularly cattle and calves (+40.9%), were the main source of the increase in this commodity group.
Metal ores, concentrates and scrap were also up compared with September 2013, as prices rose 2.5%, following a 1.2% increase the previous month.
Note to readers
The Industrial Product Price Index (IPPI) and Raw Materials Price Index are available at the Canada level only. Selected commodity groups within the IPPI are also available by region.
With each release, data for the previous six months may have been revised. The indexes are not seasonally adjusted.
The Industrial Product Price Index 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. However, 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.
Table CANSIM table329-0074: Industrial Product Price Index, by major commodity aggregations.
Table CANSIM table329-0075: Industrial Product Price Index, by commodity.
Table CANSIM table329-0076: Industrial Product Price Index, for selected groups, by region.
Table CANSIM table329-0077: Industrial Product Price Index, by North American Industry Classification System.
Table CANSIM table330-0008: Raw Materials Price Index, by commodity.
Definitions, data sources and methods: survey numbers survey number2306 and survey number2318.
The industrial product and raw materials price indexes for October will be released on November 28.
Contact information
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; infostats@statcan.gc.ca) or Media Relations (613-951-4636; statcan.mediahotline-ligneinfomedias.statcan@canada.ca).
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