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Industrial product and raw materials price indexes, June 2015

Released: 2015-07-28

The Industrial Product Price Index (IPPI) increased 0.5% in June, mainly because of higher prices for energy and petroleum products and motorized and recreational vehicles. The Raw Materials Price Index (RMPI) was unchanged in June, as lower prices for metal ores, concentrates and scrap were mostly offset by higher prices for crude energy products.

Chart 1  Chart 1: Prices for industrial goods increase
Prices for industrial goods increase

Industrial Product Price Index, monthly change

The IPPI rose 0.5% in June, after increasing 0.5% in May. Of the 21 commodity groups, 15 were up, 4 were down and 2 were unchanged.

The increase in June was led by higher prices for energy and petroleum products (+2.0%). The rise in prices was primarily due to motor gasoline (+5.9%), while lower prices for light fuel oils (-2.4%) and diesel fuel (-1.8%) moderated the gain. The IPPI excluding energy and petroleum products increased 0.4%.

Also contributing to the June increase in the IPPI was motorized and recreational vehicles (+1.2%). The increase was led by higher prices for passenger cars and light trucks (+1.3%) and, to a lesser extent, motor vehicle engines and motor vehicle parts (+0.8%) and aircraft (+1.5%). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

To a lesser extent, higher prices for meat, fish, and dairy products (+0.9%) and chemicals and chemical products (+0.8%) also contributed to the rise in the IPPI in June.

Fresh and frozen pork (+2.3%) and fresh and frozen chicken (+3.4%) were the main reasons for the increase in meat, fish and dairy products. Higher prices for petrochemicals (+3.0%) and other basic inorganic chemicals (+1.6%) led the increase for chemicals and chemical products.

Largely moderating the increase in the IPPI were lower prices for primary non-ferrous metal products (-1.5%), which posted a fourth consecutive decline and the largest drop since September 2014. The decline in this commodity group was led by lower prices for unwrought copper and copper alloys (-5.0%), which posted its largest drop since March 2014, when prices fell 6.2%. Also contributing to the decline, but to a lesser extent, were unwrought precious metals and precious metal alloys (-0.8%) as well as unwrought aluminum and aluminum alloys (-2.0%).

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 May to June 2015, the Canadian dollar depreciated 1.5% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.2% instead of increasing 0.5%.

Industrial Product Price Index, 12-month change

The IPPI declined 0.9% over the 12-month period ending in June, after falling 1.3% in May.

The year-over-year decline in the IPPI in June was primarily attributable to lower prices for energy and petroleum products (-19.7%). The main reasons for the decline were motor gasoline (-18.8%) and, to a lesser extent, diesel fuel (-23.3%) and light fuel oils (-20.4%). The IPPI excluding energy and petroleum products increased 3.1% year over year.

Also contributing to the decline were lower prices for chemicals and chemical products (-3.9%), led by lower prices for petrochemicals (-24.5%). The decline in this commodity group was moderated by higher prices for ammonia and chemical fertilizers (+13.6%) and chemical products, not elsewhere classified (+5.6%).

The year-over-year decline in the IPPI was moderated by higher prices for motorized and recreational vehicles (+9.7%). The rise was mainly attributable to passenger cars and light trucks (+10.3%), motor vehicle engines and motor vehicle parts (+6.9%) and aircraft (+15.6%).

Higher prices for meat, fish, and dairy products (+5.5%), specifically fresh and frozen beef and veal (+27.5%) also moderated the year-over-year decline in the IPPI.

Raw Materials Price Index, monthly change

The RMPI was unchanged in June, following a 4.4% gain in May. Of the six commodity groups, four were up and two were down.

Chart 2  Chart 2: Prices for raw materials are unchanged
Prices for raw materials are unchanged

Prices for crude energy products posted a third consecutive increase, rising 1.1%, mainly as a result of higher prices for conventional crude oil (+0.8%). The RMPI excluding crude energy products declined 0.8%.

Also contributing to the increase were higher prices for crop products (+1.6%) as well as animals and animal products (+0.5%).

Higher prices for canola (+7.7%) and wheat (+4.4%) were the main reasons behind the rise in crop products. The gain in animals and animal products was led by an increase in hogs (+5.1%), while lower prices for cattle and calves (-1.0%) moderated the increase.

Largely moderating the increase in the RMPI in June were lower prices for metal ores, concentrates and scrap (-3.2%). This was the largest drop in this commodity group since April 2013, when prices fell 8.2%.

Raw Materials Price Index, 12-month change

The RMPI fell 17.5% in the 12-month period ending in June, following a 16.6% decline in May.

Lower prices for crude energy products (-31.9%) were largely responsible for the decline, specifically conventional crude oil (-32.5%). The RMPI excluding crude energy products declined 0.5% from the same month last year.



  Note to readers

The Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) 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 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.

Next release

The industrial product and raw materials price indexes for July will be released on August 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; mediahotline@statcan.gc.ca).

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