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Industrial product and raw materials price indexes, March 2018

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Released: 2018-04-30

Prices of products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), increased 0.8% in March, mainly due to higher prices for energy and petroleum products and pulp and paper products. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), rose 2.1%, primarily due to 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 (+0.8%) posted a third consecutive monthly increase in March, following a 0.3% gain in February. The increase in the IPPI was widespread, with 16 commodity groups up, 4 down and 1 unchanged.

Energy and petroleum products contributed the most to the increase in the IPPI in March, with prices rising 1.3%, after falling 1.8% in February. This increase was mainly attributable to higher prices for motor gasoline (+2.8%) and lubricants and other petroleum refinery products (+4.6%). Conversely, lower prices for light fuel oils (-0.7%) and diesel fuel (-0.2%) slightly offset the increase in this commodity group. The IPPI excluding energy and petroleum products rose 0.7%.

Higher prices for pulp and paper products (+3.4%), primarily due to wood pulp (+7.4%), also contributed significantly to the increase in the IPPI. This was the sixth consecutive monthly increase for pulp and paper products, and the largest since October 2008 (+4.9%).

Motorized and recreational vehicles (+0.4%) and fruit, vegetables, feed and other food products (+1.0%) also contributed to the growth in the IPPI.

The increase in the motorized and recreational vehicles group was mainly attributable to higher prices for motor vehicle engines and motor vehicle parts (+1.7%), aircraft (+2.9%), and aircraft engines, aircraft parts and other aerospace equipment (+2.7%). Lower prices for passenger cars and light trucks (-1.1%) moderated this increase. Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Higher prices for grain and oilseed products, not elsewhere classified (+3.3%), other animal feed (+2.3%) and cookies, crackers and baked sweet goods (+2.4%) were the main sources of the increase in fruit, vegetables, feed and other food products.

Primary ferrous metal products (+2.3%) were up for a second consecutive month, primarily due to higher prices for iron and steel basic shapes (+2.5%) and wire and other rolled and drawn steel products (+3.3%).

Some IPPI prices are reported in US dollars and 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 February to March, the Canadian dollar fell 2.7% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.1% instead of 0.8%.

Industrial Product Price Index, 12-month change

The IPPI rose 2.3% over the 12-month period ending in March, following an identical increase in February.

Compared with March 2017, the gains in the IPPI were largely attributable to higher prices for energy and petroleum products (+12.4%). Higher prices for motor gasoline (+15.1%), light fuel oils (+15.7%) and diesel fuel (+15.7%) were largely responsible for the increase in this commodity group. The IPPI excluding energy and petroleum products increased 0.8% year over year.

To a lesser extent, pulp and paper products (+13.6%) also contributed to the year-over-year increase in the IPPI. This increase was mainly the result of higher prices for wood pulp (+28.9%).

Primary non-ferrous metal products rose 4.1% compared with March 2017, mainly due to higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+15.6%) and unwrought copper and copper alloys (+12.7%).

The year-over-year increase in the IPPI was mainly offset by lower prices for motorized and recreational vehicles (-3.8%), particularly prices for passenger cars and light trucks (-6.2%).

Raw Materials Price Index, monthly change

The RMPI rose 2.1% in March, after falling 0.4% in February. Of the six major commodity groups, four were up, one was down and one was unchanged.

Chart 2  Chart 2: Prices for raw materials increase
Prices for raw materials increase

The increase in the RMPI in March was mainly due to higher prices for crude energy products (+5.3%), specifically conventional crude oil prices, which rose 5.6% following a 1.9% decline the previous month. The RMPI excluding crude energy products decreased 0.5%.

To a lesser extent, crop product prices (+1.5%) also contributed to the increase in the RMPI. Other crop products (+1.1%), particularly cocoa beans (+21.2%), as well as wheat (+2.6%) and canola (including rapeseed) (+3.1%) were largely responsible for the growth in crop products.

The gains in the RMPI were moderated by animals and animal products (-2.7%), which were largely driven down by lower hog prices (-8.9%).

Raw Materials Price Index, 12-month change

The RMPI rose 10.0% over the 12-month period ending in March, following a 5.9% increase in February.

The increase in the RMPI compared with March 2017 was primarily due to higher prices for crude energy products (+21.1%). Conventional crude oil (+21.8%) was mainly responsible for the increase in this commodity group. On a year-over-year basis, the RMPI excluding crude energy products rose 2.0%.

Higher prices for metal ores, concentrates and scrap (+6.1%) also contributed to the year-over-year increase in the RMPI, but to a lesser extent.

Compared with the same month a year earlier, the increase in the RMPI was offset by animals and animal products (-3.5%), particularly lower prices for live animals (-5.9%), specifically hogs (-12.1%).



  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 established by the Bank of Canada and available in CANSIM table 176-0081 (series v111666275). 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.

A Historical Timeline of Canadian Producer Price Statistics

The publication "A Historical Timeline of Canadian Producer Price Statistics," which is part of the Prices Analytical Series (Catalogue number62F0014M), was created to showcase the key milestones in the history of Canadian producer price statistics. This historical timeline contains answers to questions such as: Who collected Canada's first statistics? What do Canadian producer price indexes measure?

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), 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 May 7. For more information, consult the document Real-time CANSIM tables.

Next release

The industrial product and raw materials price indexes for April will be released on May 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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