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Industrial product and raw materials price indexes, June 2016

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Released: 2016-07-29

The Industrial Product Price Index (IPPI) rose 0.6% in June, mainly due to higher prices for energy and petroleum products. The Raw Materials Price Index (RMPI) increased 1.8%, as a result of 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 advanced 0.6% in June, after gaining 1.2% in May. Of the 21 major commodity groups, 14 were up, 4 were down and 3 were unchanged.

Energy and petroleum products (+3.9%) posted gains for a fourth consecutive month and were the largest contributor to the increase in the IPPI. Higher prices for motor gasoline (+2.6%), light fuel oils (+6.5%) and diesel fuel (+5.4%) were the main reasons for the advance in energy and petroleum products. The IPPI excluding energy and petroleum products rose 0.3% in June.

Also contributing to the increase in the IPPI were meat, fish, and dairy products (+1.5%), led by higher prices for fresh and frozen pork (+6.2%). Prices for fresh and frozen beef and veal edged up 0.2% in June; however, these prices were down 13.8% from the same month last year. Prices for fresh and frozen pork were up 10.2% from June 2015.

Fruit, vegetables, feed and other food products (+1.2%) rose for a second straight month, posting their largest gain since an identical increase in July 2015. The rise in this commodity group was led by higher prices for grain and oilseed products not elsewhere classified (+5.4%) and other animal feed (+4.1%).

Moderating the June increase in the IPPI were lower prices for chemicals and chemical products (-0.9%), primarily led by ammonia and chemical fertilizers (-10.6%).

Motorized and recreational vehicles edged down 0.1% in June, led by lower prices for motor vehicle engines and motor vehicle parts (-0.3%), passenger cars and light trucks (-0.1%), and aircraft (-0.3%). Lower prices for motorized and recreational vehicles were closely linked to the appreciation 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 May to June, the Canadian dollar appreciated 0.4% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.7% instead of rising 0.6%.

Industrial Product Price Index, 12-month change

The IPPI declined 0.8% over the 12-month period ending in June, after falling 0.9% in May.

The main reason for the year-over-year decrease in the IPPI was lower prices for energy and petroleum products (-11.0%). Motor gasoline (-11.4%), heavy fuel oils (-24.0%), diesel fuel (-8.7%) and light fuel oils (-6.7%) contributed to the decline in prices for energy and petroleum products. The IPPI excluding energy and petroleum products increased 0.8% in June from the same month last year.

Lower prices for chemicals and chemical products (-4.0%), specifically petrochemicals (-12.8%), plastic resins (-7.7%), and ammonia and chemical fertilizers (-14.1%) also contributed to the year-over-year drop in the IPPI.

Moderating the year-over-year decrease in the IPPI were higher prices for motorized and recreational vehicles (+2.4%), specifically passenger cars and light trucks (+2.8%) and aircraft (+4.9%).

Fruit, vegetables, feed and other food products (+3.0%) also posted year-over-year gains in June, primarily due to grain and oilseed products not elsewhere classified (+12.7%), other food products (+1.4%), and other animal feed (+4.6%).

Raw Materials Price Index, monthly change

The RMPI rose 1.8% in June, after rising 7.0% in May. Of the six major commodity groups, four were up and two were down.

Chart 2  Chart 2: Prices for raw materials rise
Prices for raw materials rise

The gain in the RMPI was mainly attributable to higher prices for crude energy products (+3.5%), specifically conventional crude oil (+3.6%). The RMPI excluding crude energy products rose 0.6% in June.

Also contributing to the increase in the RMPI, but to a lesser extent, were animals and animal products (+1.0%). The gain was led by higher prices for hogs (+6.8%), while prices for cattle and calves (-1.6%) declined for a fifth straight month. Prices for cattle and calves have fallen 26.2% since peaking in May 2015.

Prices for crop products (+1.0%) rose in June, mainly due to increases in other miscellaneous crop products (+5.0%) and oilseeds, except canola (+2.7%). Lower prices for canola, including rapeseed (-3.4%), moderated the gain in this commodity group.

Raw Materials Price Index, 12-month change

The RMPI fell 9.0% over the 12-month period ending in June.

Lower prices for crude energy products (-16.0%), specifically conventional crude oil (-16.2%), were largely responsible for the decrease. The RMPI excluding crude energy products was down 3.3%.

To a lesser extent, lower prices for animals and animal products (-7.2%) also contributed to the year-over-year decline in the RMPI. The decrease in this commodity group was led by lower prices for cattle and calves (-25.4%).



  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 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 available in CANSIM 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.

Infographic: Producer Price Indexes at a Glance

The infographic, "Producer Price Indexes at a Glance," which is part of Statistics Canada — Infographics (Catalogue number11-627-M), is available. This infographic demonstrates how producer price indexes for goods and services are calculated and why they are important for the Canadian economy.

Real-time CANSIM tables

Real-time CANSIM table 329-8074 will be updated on August 5. For more information, consult the document, Real-time CANSIM tables.

Next release

The industrial product and raw materials price indexes for July will be released on August 30.

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; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).

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