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Industrial product and raw materials price indexes
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In June, the Industrial Product Index rose 0.7% compared with May, while the Raw Materials Price Index increased 6.2%. Both gains were due to a strong increase in petroleum prices.
June's increase in the IPPI followed declines of 1.2% in May and 0.6% in April. The IPPI was pushed up mainly by the prices for petroleum and coal products and, to a lesser extent, primary metal products.
Prices for petroleum and coal products rose 10.8%, more than twice the 5.2% increase observed in May. However, excluding petroleum and coal products, the IPPI posted a 0.3% decline, slower than the 1.8% drop recorded in May.
Most of the 2.2% increase for primary metal products came from higher prices for nickel products (+19.6%) and copper and copper alloy products (+8.0%).
The Canadian dollar rose 2.2% in June against the US dollar. Some Canadian producers who export their products to the United States are generally paid in prices set in US dollars. Consequently, the relative weakness of the US dollar in relation to the Canadian dollar had the effect of reducing the corresponding prices in Canadian dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 1.2% instead of 0.7%.
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 quote their prices in foreign currencies, particularly for motor vehicles, pulp and paper products, and wood products. Determining the full effect of fluctuating exchange rates on the IPPI is a difficult analytical task. However, it should be noted that many prices collected to calculate the IPPI are quoted in US dollars and then converted into Canadian dollars. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI.
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 these prices are set in a world market. Unlike the IPPI, the RMPI includes goods that are not produced in Canada.
12-month change: Fourth consecutive decline in the Industrial Product Price Index
Year over year, the IPPI declined 5.4% in June, exceeding the decreases of 4.5% in May and 2.3% in April.
The IPPI was pulled down mainly by the prices for petroleum and coal products (-36.5%), primary metal products (-15.5%) and chemical products (-5.5%). These declines were mainly offset by increases in prices for motor vehicles and other transport equipment (+8.2%).
Year over year, the prices for products excluding petroleum and coal registered a fourth consecutive slowdown, pushing the index down to June 2008 levels.
Since June 2008, the Canadian dollar has lost 9.7% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 8.2% instead of 5.4%.
Raw material prices: The index continues to rise on the strength of crude oil prices
The RMPI posted a month-over-month increase of 6.2% in June, after rising 2.2% in May.
Prices for mineral fuels posted a strong increase of 12.4% in June, after registering a 6.2% gain in May. The increase was mainly due to a 14.4% rise in the price for crude oil. Excluding mineral fuels, the RMPI posted a gain of 0.8%, following a 0.9% decrease the previous month.
Non-ferrous metals rose 5.0% in June compared with May, propelled by strong demand, especially from China, for lead, copper, nickel and zinc concentrates.
Year over year, raw material prices fell 30.7%, a decrease of the same magnitude as those registered since December 2008. The drop in raw material prices was attributable to the strong 44.1% price reduction for mineral fuels and, to a lesser extent, to decreases in the prices for non-ferrous metals (-13.6%) and vegetable products (-18.9%).
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 June 2009 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for July will be released on August 28.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Client Services (613-951-9606, fax: 613-951-2848, prices-prix@statcan.gc.ca), Producer Prices Division.
Table 1
| Relative importance1 | June 2008 | May 2009r | June 2009p | June 2008 to June 2009 | May to June 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial product price index (IPPI) | 100.00 | 123.4 | 115.9 | 116.7 | -5.4 | 0.7 |
| IPPI excluding petroleum and coal products | 94.32 | 111.1 | 111.4 | 111.1 | 0.0 | -0.3 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 112.0 | 113.5 | 113.0 | 0.9 | -0.4 |
| Fruit, vegetables, feeds and other food products | 5.99 | 120.8 | 118.1 | 118.6 | -1.8 | 0.4 |
| Beverages | 1.57 | 126.5 | 129.3 | 129.2 | 2.1 | -0.1 |
| Tobacco and tobacco products | 0.63 | 220.5 | 223.4 | 223.4 | 1.3 | 0.0 |
| Rubber, leather and plastic fabricated products | 3.30 | 117.6 | 120.7 | 119.9 | 2.0 | -0.7 |
| Textile products | 1.58 | 100.8 | 102.5 | 102.4 | 1.6 | -0.1 |
| Knitted products and clothing | 1.51 | 104.7 | 104.7 | 104.8 | 0.1 | 0.1 |
| Lumber and other wood products | 6.30 | 81.8 | 80.3 | 80.5 | -1.6 | 0.2 |
| Furniture and fixtures | 1.59 | 122.6 | 124.4 | 124.4 | 1.5 | 0.0 |
| Pulp and paper products | 7.23 | 106.3 | 109.3 | 108.0 | 1.6 | -1.2 |
| Printing and publishing | 1.70 | 119.6 | 124.3 | 123.9 | 3.6 | -0.3 |
| Primary metal products | 7.80 | 149.0 | 123.2 | 125.9 | -15.5 | 2.2 |
| Metal fabricated products | 4.11 | 133.5 | 133.2 | 132.3 | -0.9 | -0.7 |
| Machinery and equipment | 5.48 | 105.4 | 111.5 | 110.9 | 5.2 | -0.5 |
| Motor vehicles and other transport equipment | 22.16 | 86.9 | 95.2 | 94.0 | 8.2 | -1.3 |
| Electrical and communications products | 5.77 | 90.1 | 95.3 | 94.5 | 4.9 | -0.8 |
| Non-metallic mineral products | 1.98 | 125.2 | 128.7 | 128.7 | 2.8 | 0.0 |
| Petroleum and coal products2 | 5.68 | 348.9 | 199.9 | 221.4 | -36.5 | 10.8 |
| Chemicals and chemical products | 7.07 | 140.8 | 132.5 | 133.0 | -5.5 | 0.4 |
| Miscellaneous manufactured products | 2.40 | 120.2 | 124.2 | 124.0 | 3.2 | -0.2 |
| Miscellaneous non-manufactured products | 0.38 | 296.0 | 268.5 | 260.8 | -11.9 | -2.9 |
| Intermediate goods3 | 60.14 | 130.6 | 118.3 | 119.6 | -8.4 | 1.1 |
| First-stage intermediate goods4 | 7.71 | 157.2 | 119.8 | 124.2 | -21.0 | 3.7 |
| Second-stage intermediate goods5 | 52.43 | 126.6 | 118.1 | 118.9 | -6.1 | 0.7 |
| Finished goods6 | 39.86 | 112.5 | 112.3 | 112.4 | -0.1 | 0.1 |
| Finished foods and feeds | 8.50 | 118.4 | 120.6 | 120.4 | 1.7 | -0.2 |
| Capital equipment | 11.73 | 96.9 | 104.0 | 103.1 | 6.4 | -0.9 |
| All other finished goods | 19.63 | 119.3 | 113.8 | 114.6 | -3.9 | 0.7 |
Table 2
| Relative importance1 | June 2008 | May 2009r | June 2009p | June 2008 to June 2009 | May to June 2009 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw materials price index (RMPI) | 100.00 | 230.7 | 150.5 | 159.8 | -30.7 | 6.2 |
| Mineral fuels | 35.16 | 448.5 | 223.0 | 250.6 | -44.1 | 12.4 |
| Vegetable products | 10.28 | 142.1 | 116.5 | 115.3 | -18.9 | -1.0 |
| Animals and animal products | 20.30 | 108.7 | 113.2 | 110.5 | 1.7 | -2.4 |
| Wood | 15.60 | 81.3 | 75.5 | 76.6 | -5.8 | 1.5 |
| Ferrous materials | 3.36 | 171.2 | 129.4 | 129.4 | -24.4 | 0.0 |
| Non-ferrous metals | 12.93 | 187.3 | 154.2 | 161.9 | -13.6 | 5.0 |
| Non-metallic minerals | 2.38 | 167.9 | 177.5 | 177.4 | 5.7 | -0.1 |
| RMPI excluding mineral fuels | 64.84 | 130.0 | 117.0 | 117.9 | -9.3 | 0.8 |
