Industrial product and raw materials price indexes
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In November, the Industrial Product Price Index (IPPI) increased 0.5% and the Raw Materials Price Index was up 3.5% compared with October. The upward pressure on both indexes came mainly from petroleum and metals prices.
The IPPI rose 0.5% in November, the same growth rate as in October and the fourth consecutive monthly advance. In November, the IPPI was pushed upward primarily by petroleum and coal products (+3.9%) and to a lesser extent by primary metal products (+0.7%).
Increases in petroleum and coal products prices were sustained largely by strong demand in emerging countries and colder weather in Europe, though global petroleum inventories remained high.
For primary metal products, the advance in prices was smaller than in the previous four months, as it was moderated by a decline in nickel products (-4.3%). Nickel prices were affected by weaker demand for stainless steel in Asia and by higher world inventories of nickel. In contrast, demand for precious metals continued its strong growth, driving up prices of precious metal basic manufactured shapes (+12.5%) and silver and platinum (+10.1%).
Conversion of indexes to 2002=100
With the release of August 2010 data, the Producer Prices Division converted the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) series to 2002=100, with 2002 as the base year. These indexes have also been updated using a 2002 weighting pattern based on the production values of 2002.
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 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.
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 release, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1=US$X).
The 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.
The IPPI's increase was moderated by a 0.4% decline in prices for motor vehicles and other transportation equipment. This decrease was attributable to a 0.5% appreciation in the value of the Canadian dollar relative to the US dollar.
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 0.7% instead of 0.5%.
Excluding petroleum and coal prices, the IPPI would have increased 0.2% in November, following a 0.1% advance in October.
12-month change in the IPPI: Rising trend continues
The IPPI rose 2.1% in November compared with the same month a year earlier, after advancing 2.4% in October. The upward trend continued, as the Index posted its eighth consecutive year-over-year increase. Of the 21 major commodity aggregations, 14 were up and 7 decreased.
In the past 12 months, the upward pressure on the IPPI came mainly from higher prices for primary metal products (+11.5%), petroleum and coal products (+7.0%) and, to a lesser extent, chemical products (+3.2%).
The 4.6% increase in the value of the Canadian dollar relative to the US dollar dampened the IPPI's year-over-year advance in November. Without the impact of the exchange rate, the IPPI would have risen 3.2% instead of 2.1%.
Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 2.3% in November compared with the same month a year earlier, continuing the downward movement that started in October 2009.
Year-over-year, the IPPI excluding petroleum and coal would have climbed 1.6% in November, following a 1.8% advance in October. It was the seventh consecutive year-over-year increase.
Raw Materials Price Index: The upward trend continues
The Raw Materials Price Index (RMPI) rose 3.5% in November, primarily because of higher prices for mineral fuels (+7.0%), non-ferrous metals (+2.1%) and vegetable products (+3.2%). Crude oil prices were up 7.7% after increasing 2.5% in October.
In November, the RMPI's advance was moderated by lower prices for animals and animal products (-2.5%).
Excluding mineral fuels, the RMPI would have risen 0.6% in November, a smaller gain than the previous four monthly increases.
Compared with the same month a year earlier, the RMPI was up 6.8%, following a 5.7% advance in October. Year-over-year, the RMPI has been on an upward trend since November 2009. The main contributors to the RMPI's year-over-year increase in November were prices of non-ferrous metals (+16.5%), vegetable products (+21.9%), mineral fuels (+2.2%) and animals and animal products (+5.1%).
Year-over-year, excluding mineral fuels, the RMPI would have increased 11.1% in November, a larger gain than in September (+10.9%) but smaller than in October (+13.5%).
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 November 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for December 2010 will be released on January 31, 2011.
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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