Industrial product and raw materials price indexes, September 2015
The Industrial Product Price Index (IPPI) declined 0.3% in September, mainly as a result of lower prices for energy and petroleum products. The Raw Materials Price Index (RMPI) rose 3.0% in September, led by higher prices for crude energy products.
Industrial Product Price Index, monthly change
In September, the IPPI declined 0.3% for the second consecutive month. Among the 21 major commodity groups, 15 were up, 4 were down and 2 were unchanged.
The decline in the IPPI in September was primarily due to lower prices for energy and petroleum products (-3.6%), particularly motor gasoline (-7.0%), which posted its largest decline since January 2015. Higher prices for diesel fuel (+1.7%) moderated the decline in energy and petroleum products. The IPPI excluding energy and petroleum products increased 0.2% in September and has risen 7.7% since September 2013.
Lower prices for chemicals and chemical products (-0.8%), specifically petrochemicals (-5.4%) and ammonia and chemical fertilizers (-1.8%), also contributed to the IPPI decline. The decrease in chemicals and chemical products was somewhat mitigated by higher prices for other basic inorganic chemicals (+1.9%).
Higher prices for motorized and recreational vehicles (+0.6%) and primary non-ferrous metal products (+1.3%) helped moderate the decline in the IPPI in September. The gain in motorized and recreational vehicles was led by passenger cars and light trucks (+0.7%), motor vehicle engines and motor vehicle parts (+0.5%) as well as aircraft (+0.8%). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.
The increase in primary non-ferrous metal products (+1.3%) was mainly led by higher prices for unwrought copper and copper alloys (+5.5%), which posted their largest gain since September 2012. Also contributing to the increase was unwrought aluminum and aluminum alloys (+2.5%) as well as unwrought precious metals and precious metal alloys (+0.5%).
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 2015, the Canadian dollar depreciated 0.9% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 0.5% instead of decreasing 0.3%.
Industrial Product Price Index, 12-month change
The IPPI declined 0.4% over the 12-month period ending in September, after falling 0.4% in August.
The main reason for the year-over-year decline in the IPPI in September was energy and petroleum products (-23.9%), specifically lower prices for motor gasoline (-22.9%), diesel fuel (-24.8%), light fuel oils (-23.9%) and heavy fuel oils (-43.6%). The IPPI excluding energy and petroleum products increased 4.2% in September.
Chemicals and chemical products (-5.3%) also contributed to the decline in the IPPI, led by lower prices for petrochemicals (-34.7%). Meanwhile, higher prices for ammonia and chemical fertilizers (+11.8%) and chemical products, not elsewhere classified (+7.4%) moderated the decline in the commodity group.
Higher year-over-year prices for motorized and recreational vehicles (+13.4%), specifically passenger cars and light trucks (+14.0%), motor vehicle engines and motor vehicle parts (+9.0%) as well as aircraft (+21.4%), largely moderated the year-over-year decline in the IPPI.
Higher prices for meat, fish, and dairy products (+5.1%), specifically higher year-over-year prices for fresh and frozen beef and veal (+14.1%) and, to a lesser extent, fresh and frozen pork (+6.5%) also tempered the IPPI decrease.
Raw Materials Price Index, monthly change
The RMPI rose 3.0% in September, after declining 6.8% in August. Of the six major commodity groups, three were up and three were down.
The main reason for the increase in the RMPI was higher prices for crude energy products (+8.2%), specifically conventional crude oil (+8.7%). The RMPI excluding crude energy products edged down 0.1%.
Higher prices for metal ores, concentrates and scrap (+1.1%) contributed to the increase in the RMPI, while lower prices for animals and animal products (-1.3%) moderated the gain.
Raw Materials Price Index, 12-month change
The RMPI declined 20.9% over the 12-month period ending in September.
Lower prices for crude energy products (-39.6%) were largely responsible for the decline, specifically conventional crude oil (-40.5%). The RMPI excluding crude energy products declined 0.7% from the same month last year.
Metal ores, concentrates and scrap (-6.3%) also contributed to the year-over-year decline in the RMPI, while higher prices for crop products (+7.9%) helped moderate the RMPI.
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 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.
Real-time CANSIM tables
The industrial product and raw materials price indexes for October will be released on November 27.
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; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
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