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Industrial product and raw materials price indexes
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The Industrial Product Price Index (IPPI) declined 0.4% in March, mainly as a result of the appreciation of the Canadian dollar against its American counterpart. The Raw Materials Price Index (RMPI) rose 0.8%, led primarily by higher prices for mineral fuels.
The IPPI declined in March after four consecutive monthly advances. The 3.3% increase in the value of the Canadian dollar relative to the US dollar had a greater impact on the IPPI than the rising prices for primary metals and petroleum and coal products. Of the 21 IPPI commodity groups, 13 were down and 4 were up.
Note to readers
All data in this release are seasonally unadjusted and is subject to revision for six months (e.g., 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, 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.
Prices of motor vehicles and other transportation equipment fell 2.0% in March, largely due to the appreciation of the Canadian dollar relative to the US currency. The IPPI came under downward pressure from other commodities that are equally sensitive to exchange rate movements, including pulp and paper products (-1.1%) and lumber and other wood products (-1.3%).
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. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.4% instead of falling 0.4%.
The effect on the IPPI of the Canadian dollar's appreciation against the US dollar was moderated somewhat by higher prices for primary metal products (+1.6%) and petroleum and coal products (+0.7%).
Excluding petroleum and coal prices, the IPPI fell 0.6%, after moving in the opposite direction in the previous four months. In March, the Index was 0.4% above the low reached in October 2009, after which it rebounded.
12-month change: The appreciation of the Canadian dollar is still the main cause of the IPPI decline
The IPPI was down 1.3% in March compared with the same month a year earlier. The decline in March was the most pronounced in the past four months, but it was moderate in comparison with the decreases observed between April and November 2009.
The decrease in the IPPI over the past 12 months was led mainly by motor vehicles and other transportation equipment (-12.5%). Other commodities made smaller contributions to the decline, including pulp and paper products (-10.3%) and electrical and communication products (-7.3%).
On the other hand, rising prices for petroleum and coal products (+26.7%) and primary metal products (+9.5%) moderated the IPPI year-over-year decline.
Between March 2009 and March 2010, prices for products excluding petroleum and coal were down 3.8%, outpacing the 2.8% decline in February. It was the 10th successive decrease for this group of products.
Since March 2009, the Canadian dollar rose 23.6% in value relative to its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have increased 3.6% instead of declining 1.3%.
Raw Materials Price Index: The upward trend continues
The Raw Materials Price Index (RMPI) increased 0.8% in March, following gains of 3.5% in January and 0.4% in February, continuing the upward trend that began in January 2009.
In March, the RMPI was pushed upward mainly by rising prices for mineral fuels, particularly crude oil. After increasing 5.6% in January, crude oil prices posted more moderate gains in February (+2.1%) and March (+1.4%).
Prices for animals and animal products (+2.4%) made a smaller contribution to the increase in the RMPI in March.
The upward movement in raw materials prices was slowed, primarily by lower prices for vegetable products (-2.5%).
Without mineral fuels, the RMPI increased 0.3% in March, following a 1.1% drop in February.
From March 2009 to March 2010, raw materials prices rose 14.9%, a considerable slowdown from the 27.8% increase recorded in February. Crude oil prices were up 34.7% in March, compared with 76.8% in February. Non-ferrous metals played a smaller role in the RMPI advance, with a year-over-year increase of 27.5%. 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 March 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for April will be released on May 31.
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 | March 2009 | February 2010r | March 2010p | February to March 2010 | March 2009 to March 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Industrial Product Price Index (IPPI) | 100.00 | 118.0 | 117.0 | 116.5 | -0.4 | -1.3 |
| IPPI excluding petroleum and coal products | 94.32 | 114.2 | 110.6 | 109.9 | -0.6 | -3.8 |
| Aggregation by commodities | ||||||
| Meat, fish and dairy products | 5.78 | 114.5 | 112.0 | 112.5 | 0.4 | -1.7 |
| Fruit, vegetables, feeds and other food products | 5.99 | 117.1 | 116.9 | 116.1 | -0.7 | -0.9 |
| Beverages | 1.57 | 129.7 | 131.0 | 131.0 | 0.0 | 1.0 |
| Tobacco and tobacco products | 0.63 | 223.4 | 222.9 | 222.9 | 0.0 | -0.2 |
| Rubber, leather and plastic fabricated products | 3.30 | 122.3 | 120.7 | 120.6 | -0.1 | -1.4 |
| Textile products | 1.58 | 103.0 | 101.8 | 101.6 | -0.2 | -1.4 |
| Knitted products and clothing | 1.51 | 104.7 | 105.2 | 105.4 | 0.2 | 0.7 |
| Lumber and other wood products | 6.30 | 83.0 | 83.5 | 82.4 | -1.3 | -0.7 |
| Furniture and fixtures | 1.59 | 124.8 | 124.5 | 124.5 | 0.0 | -0.2 |
| Pulp and paper products | 7.23 | 116.2 | 105.4 | 104.2 | -1.1 | -10.3 |
| Printing and publishing | 1.70 | 126.1 | 124.3 | 123.8 | -0.4 | -1.8 |
| Primary metal products | 7.80 | 124.5 | 134.1 | 136.3 | 1.6 | 9.5 |
| Metal fabricated products | 4.11 | 135.7 | 130.3 | 129.9 | -0.3 | -4.3 |
| Machinery and equipment | 5.48 | 114.0 | 108.6 | 107.8 | -0.7 | -5.4 |
| Motor vehicles and other transport equipment | 22.16 | 101.5 | 90.6 | 88.8 | -2.0 | -12.5 |
| Electrical and communications products | 5.77 | 98.6 | 92.4 | 91.4 | -1.1 | -7.3 |
| Non-metallic mineral products | 1.98 | 128.8 | 129.4 | 129.4 | 0.0 | 0.5 |
| Petroleum and coal products2 | 5.68 | 187.2 | 235.5 | 237.1 | 0.7 | 26.7 |
| Chemicals and chemical products | 7.07 | 131.9 | 136.0 | 135.2 | -0.6 | 2.5 |
| Miscellaneous manufactured products | 2.40 | 127.8 | 123.9 | 123.4 | -0.4 | -3.4 |
| Miscellaneous non-manufactured products | 0.38 | 254.7 | 222.7 | 212.7 | -4.5 | -16.5 |
| Intermediate goods3 | 60.14 | 120.0 | 121.3 | 120.8 | -0.4 | 0.7 |
| First-stage intermediate goods4 | 7.71 | 119.6 | 139.2 | 139.0 | -0.1 | 16.2 |
| Second-stage intermediate goods5 | 52.43 | 120.0 | 118.6 | 118.0 | -0.5 | -1.7 |
| Finished goods6 | 39.86 | 115.0 | 110.7 | 110.0 | -0.6 | -4.3 |
| Finished foods and feeds | 8.50 | 121.2 | 121.1 | 121.2 | 0.1 | 0.0 |
| Capital equipment | 11.73 | 108.6 | 100.0 | 98.7 | -1.3 | -9.1 |
| All other finished goods | 19.63 | 116.2 | 112.6 | 112.0 | -0.5 | -3.6 |
Table 2
| Relative importance1 | March 2009 | February 2010r | March 2010p | February to March 2010 | March 2009 to March 2010 | |
|---|---|---|---|---|---|---|
| (1997=100) | % change | |||||
| Raw Materials Price Index (RMPI) | 100.00 | 147.8 | 168.5 | 169.8 | 0.8 | 14.9 |
| RMPI excluding mineral fuels | 64.84 | 116.4 | 121.2 | 121.6 | 0.3 | 4.5 |
| Mineral fuels | 35.16 | 215.9 | 270.9 | 274.0 | 1.1 | 26.9 |
| Vegetable products | 10.28 | 113.7 | 105.0 | 102.4 | -2.5 | -9.9 |
| Animals and animal products | 20.30 | 115.2 | 110.6 | 113.2 | 2.4 | -1.7 |
| Wood | 15.60 | 77.8 | 75.5 | 75.3 | -0.3 | -3.2 |
| Ferrous materials | 3.36 | 137.8 | 137.2 | 136.5 | -0.5 | -0.9 |
| Non-ferrous metals | 12.93 | 145.5 | 184.9 | 185.5 | 0.3 | 27.5 |
| Non-metallic minerals | 2.38 | 178.0 | 175.9 | 175.9 | 0.0 | -1.2 |
