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Industrial product and raw materials price indexes
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In February, the Industrial Product Price Index (IPPI) was unchanged from January. The Raw Materials Price Index (RMPI) rose 0.4%, led by higher prices for mineral fuels.
The IPPI remained at the same level as in January, following three consecutive monthly advances. The IPPI is still on an upward trend, which began after it bottomed out in October 2009.
Prices of motor vehicles and other transportation equipment were up 0.9% in February, largely due to the 1.3% depreciation of the Canadian dollar relative to the US dollar. The IPPI came under upward pressure from other products that are more sensitive to exchange rate movements, including lumber and other wood products (+1.7%) and pulp and paper products (+1.0%).
Some Canadian producers who export their products to the United States are generally paid on the basis of prices set in US dollars. Consequently, the relative weakness of the Canadian dollar in relation to the American dollar had the effect of increasing the corresponding prices in Canadian dollars. If the exchange rate used to convert those prices had remained unchanged, the IPPI would have declined 0.3% instead of remaining unchanged.
The effect of the Canadian dollar's depreciation against the US currency was offset by lower prices for primary metal products (-2.1%) and petroleum and coal products (-1.2%).
Excluding petroleum and coal prices, the IPPI continued on a slight upward trend with a 0.2% advance in February.
Note to readers
The Industrial Product Price Index (IPPI) 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. But the conversion into Canadian dollars only reflects how respondents provide their prices. Moreover, this is not a measure that takes into account the full effect of exchange rates, since that is a more difficult analytical task.
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 text, 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, most prices are denominated in Canadian dollars. For this reason, conversion into Canadian dollars has only a minor effect on the calculation of the RMPI. Moreover, the full effect of exchange rates on the RMPI is not measured, since that is a more difficult analytical task.
12-month change: The appreciation of the Canadian dollar is still the main cause in the IPPI decline
The IPPI was down 0.6% in February compared with the same month a year earlier. Since March 2009, the index's year-over-year change has been a series of decreases. However, the last three declines were smaller than the preceding ones, particularly in July 2009, when the largest drop was recorded (-7.1%).
The 12-month decrease in the IPPI was led by motor vehicles and other transportation equipment (-9.8%). Other factors also contributing to the decline were pulp and paper products (-9.1%), electrical and communication products (-5.8%), metal fabricated products (-4.7%) and machinery and equipment (-4.1%).
On the other hand, rising prices for petroleum and coal products (+25.4%) and primary metal products (+8.8%) moderated the year-over-year decline in the IPPI.
Between February 2009 and February 2010, prices for products excluding petroleum and coal were down 2.9%, a slightly larger year-over-year decline than in January. It was the ninth successive decrease for this product group.
Since February 2009, the Canadian dollar rose 17.8% in value relative to its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have increased 3.3% instead of declining 0.6%.
Raw Materials Price Index: Second consecutive monthly increase
The RMPI climbed 0.4% in February after a 3.4% advance in January, continuing the upward trend that began in January 2009.
In February, the RMPI was pushed upward mainly by rising prices for mineral fuels, particularly crude oil (+2.1%). Crude oil prices increased 5.6% in January.
Prices for ferrous materials and animals and animal products made smaller contributions to the February advance of the RMPI.
The upward movement in raw materials prices was slowed by falling non-ferrous metals prices (-4.6%), which declined following six consecutive monthly gains. Most of the products in this group posted declines, especially zinc (-9.8%) and lead concentrates (-8.7%). Metals prices were sensitive, among other reasons, to weaker demand from Asia.
Excluding mineral fuels, the RMPI would have declined 1.1%, following four consecutive monthly increases.
From February 2009 to February 2010, raw materials prices increased 27.8%, as a result of sharply higher prices for mineral fuels (+58.0%) and non-ferrous metals (+34.0%). All other groups posted declines.
Available on CANSIM: tables 329-0038 to 329-0049 and 330-0006.
Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.
The February 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for March will be released on April 30.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (toll-free 1-888-951-4550; 613-951-4550; fax: 613-951-3117; ppd-info-dpp@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | February 2009 | January 2010r | February 2010p | January to February 2010 | February 2009 to February 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 117.6 | 116.9 | 116.9 | 0.0 | -0.6 |
| IPPI excluding petroleum and coal products | 94.32 | 113.8 | 110.3 | 110.5 | 0.2 | -2.9 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 113.2 | 111.8 | 112.0 | 0.2 | -1.1 |
| Fruit, vegetables, feeds and other food products | 5.99 | 116.6 | 117.5 | 117.1 | -0.3 | 0.4 |
| Beverages | 1.57 | 129.0 | 130.5 | 130.6 | 0.1 | 1.2 |
| Tobacco and tobacco products | 0.63 | 223.5 | 222.6 | 222.7 | 0.0 | -0.4 |
| Rubber, leather and plastic fabricated products | 3.30 | 121.8 | 120.3 | 120.7 | 0.3 | -0.9 |
| Textile products | 1.58 | 103.0 | 101.8 | 101.8 | 0.0 | -1.2 |
| Knitted products and clothing | 1.51 | 104.7 | 105.0 | 105.2 | 0.2 | 0.5 |
| Lumber and other wood products | 6.30 | 83.1 | 81.6 | 83.0 | 1.7 | -0.1 |
| Furniture and fixtures | 1.59 | 125.0 | 124.3 | 124.3 | 0.0 | -0.6 |
| Pulp and paper products | 7.23 | 115.9 | 104.3 | 105.3 | 1.0 | -9.1 |
| Printing and publishing | 1.70 | 126.2 | 124.1 | 124.2 | 0.1 | -1.6 |
| Primary metal products | 7.80 | 123.3 | 137.1 | 134.2 | -2.1 | 8.8 |
| Metal fabricated products | 4.11 | 136.8 | 129.9 | 130.4 | 0.4 | -4.7 |
| Machinery and equipment | 5.48 | 113.4 | 108.2 | 108.7 | 0.5 | -4.1 |
| Motor vehicles and other transport equipment | 22.16 | 100.5 | 89.9 | 90.7 | 0.9 | -9.8 |
| Electrical and communications products | 5.77 | 98.1 | 92.0 | 92.4 | 0.4 | -5.8 |
| Non-metallic mineral products | 1.98 | 128.8 | 129.3 | 129.3 | 0.0 | 0.4 |
| Petroleum and coal products2 | 5.68 | 187.8 | 238.3 | 235.5 | -1.2 | 25.4 |
| Chemicals and chemical products | 7.07 | 132.7 | 133.8 | 135.0 | 0.9 | 1.7 |
| Miscellaneous manufactured products | 2.40 | 127.3 | 124.2 | 124.0 | -0.2 | -2.6 |
| Miscellaneous non-manufactured products | 0.38 | 267.7 | 230.0 | 222.2 | -3.4 | -17.0 |
| Intermediate goods3 | 60.14 | 120.0 | 121.2 | 121.2 | 0.0 | 1.0 |
| First-stage intermediate goods4 | 7.71 | 120.3 | 137.9 | 138.5 | 0.4 | 15.1 |
| Second-stage intermediate goods5 | 52.43 | 119.9 | 118.7 | 118.5 | -0.2 | -1.2 |
| Finished goods6 | 39.86 | 114.1 | 110.3 | 110.6 | 0.3 | -3.1 |
| Finished foods and feeds | 8.50 | 120.2 | 120.8 | 120.9 | 0.1 | 0.6 |
| Capital equipment | 11.73 | 107.8 | 99.4 | 100.0 | 0.6 | -7.2 |
| All other finished goods | 19.63 | 115.2 | 112.4 | 112.6 | 0.2 | -2.3 |
Table 2
| Relative importance1 | February 2009 | January 2010r | February 2010p | January to February 2010 | February 2009 to February 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 131.8 | 167.8 | 168.5 | 0.4 | 27.8 |
| RMPI excluding mineral fuels | 64.84 | 113.5 | 122.6 | 121.2 | -1.1 | 6.8 |
| Mineral fuels | 35.16 | 171.4 | 265.6 | 270.8 | 2.0 | 58.0 |
| Vegetable products | 10.28 | 112.2 | 104.9 | 105.1 | 0.2 | -6.3 |
| Animals and animal products | 20.30 | 110.7 | 109.7 | 110.6 | 0.8 | -0.1 |
| Wood | 15.60 | 79.2 | 76.1 | 75.5 | -0.8 | -4.7 |
| Ferrous materials | 3.36 | 137.7 | 131.3 | 137.4 | 4.6 | -0.2 |
| Non-ferrous metals | 12.93 | 138.3 | 194.3 | 185.3 | -4.6 | 34.0 |
| Non-metallic minerals | 2.38 | 177.2 | 173.7 | 173.8 | 0.1 | -1.9 |
