Industrial product and raw materials price indexes
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In February, the Industrial Product Price Index (IPPI) increased 0.7% and the Raw Materials Price Index (RMPI) rose 1.8%. Both indexes have been on an upward trend since mid-2010.
The IPPI was up 0.7% in February, following increases of 0.8% in December and 0.4% in January. The advance in February was led mainly by petroleum and coal products (+3.0%) and primary metal products (+2.5%). Chemical products (+1.0%) and meat, fish and dairy products (+1.4%) had more modest contributions.
Higher prices for petroleum and coal products in February were in part influenced by reduced production.
In February, prices for primary metal products continued their growth, supported by higher demand and limited production. All primary metal products sub-groups were up, particularly "other non-ferrous metals" (+4.7%), nickel products (+8.7%) and copper and copper alloys (+2.1%). The other non-ferrous metals group was pushed upward largely by precious metal basic manufactured products (+11.7%) and by silver and platinum (+6.9%).
The IPPI advance was moderated slightly by a 0.4% decline in prices for motor vehicles and other transportation equipment. The decrease was due mostly to a 0.6% appreciation in the Canadian dollar relative to the US dollar.
Note to readers
All data in this release are seasonally unadjusted and are subject to revision for six months (for example, when the July index is released, the index for the preceding January becomes final).
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, as few prices are denominated in foreign currencies, their conversion into Canadian dollars has only a minor effect on the calculation of the RMPI.
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 strength of the Canadian dollar in relation to the US dollar had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.9% instead of 0.7%.
In February, excluding petroleum and coal products, the IPPI would have increased by 0.5%.
12-month change in the IPPI: The upward trend continues
The IPPI rose 3.4% in February compared with the same month a year earlier, after advancing 3.0% in December and 2.9% in January. The gain in February was the largest since the acceleration of the index that began in September 2010.
In the past 12 months, the IPPI advance was driven mainly by higher prices for petroleum and coal products (+16.0%), primary metal products (+15.6%) and, to a lesser extent, fruits, vegetables, feeds and other food products (+5.0%).
In February, the 7.0% year-over-year increase in the value of the Canadian dollar relative to the US dollar dampened the IPPI advance. Without the impact of the exchange rate, the IPPI would have risen 4.9% instead of 3.4%.
Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 3.5% in February compared with the same month a year earlier, continuing the downward movement that started in October 2009.
Year over year, if petroleum and coal prices were excluded, the IPPI would have increased 1.8% in February, the 10th consecutive year-over-year gain, and a growth rate comparable with the rates observed in the previous four months.
Raw Materials Price Index: Fifth consecutive advance
The Raw Materials Price Index (RMPI) rose 1.8% in February, primarily because of higher prices for non-ferrous metals (+4.5%), animals and animal products (+3.4%) and vegetable products (+4.7%).
Radioactive products (+12.5%), copper and nickel concentrates (+2.9%) and non-ferrous metal scrap (+6.0%) were the biggest contributors to the advance in the non-ferrous metals price index. In February, prices for radioactive products continued their upward trend, which began in mid-2010, in part as a result of increased demand on world markets.
Among agricultural products, the biggest contributors were animals for slaughter, such as hogs-swine (+12.3%) and cattle and calves (+4.4%), as well as grains (+8.0%) and natural rubber and allied gums (+10.3%).
Following the 2.6% decline in January, mineral fuels edged up 0.1% in February, moderating the RMPI advance.
Without mineral fuels, the RMPI would have increased for the eighth consecutive month, rising 3.3% in February, slightly faster than the 3.0% growth observed in December and January.
Compared with the same month a year earlier, the RMPI was up 11.0% in February, following a 9.6% gain in January. Year over year, the RMPI has been on an upward trend since November 2009. Higher prices for non-ferrous metals (+28.5%), vegetable products (+41.5%), animals and animal products (+9.0%) as well as mineral fuels (+2.3%) were the main factors in the RMPI year-over-year advance in February.
Year over year, if mineral fuels were excluded, the RMPI would have increased 19.2% in February, its highest growth rate since April 2007, when it rose 21.8%.
Available on CANSIM: tables 329-0056 to 329-0068 and 330-0007.
Tables 329-0056: Industrial Product Price Index by major commodity aggregations.
Table 329-0057: Industrial Product Price Index by industry.
Table 329-0058: Industrial Product Price Index by stage of processing.
Tables 329-0059 to 329-0068: Industrial Product Price Index by commodity.
Table 330-0007: Raw Materials Price Index by commodity.
Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.
The February 2011 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 May 2.
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.
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