Industrial product and raw materials price indexes
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In December, the Industrial Product Price Index (IPPI) rose 0.7% and the Raw Materials Price Index was up 4.2% compared with November. The upward trend in the two indexes was sustained by higher prices for petroleum and metals.
The IPPI was up for the fifth consecutive month, rising 0.7% in December following increases of 0.5% in October and 0.6% in November. The increase in December was led mainly by petroleum and coal products (+4.0%) and, to a lesser extent, by primary metal products (+1.7%) and chemical products (+0.9%).
Higher prices for petroleum and coal products in December were supported mainly by positive signs from the American economy and increased demand due in part to colder weather in the northern hemisphere.
Primary metal products prices rose 1.7%, following a 0.8% gain in November. All metals were up, but copper and precious metals made the strongest contributions. World demand for copper has been strong as supply continued to be constrained. There were also production interruptions. Demand for precious metals continued to grow steadily, and resulted mainly in higher prices for silver and platinum (+9.4%) and precious metal basic manufactured shapes (+2.3%).
The IPPI advance 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 of the Canadian dollar relative to the US dollar.
Note to readers
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.
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 0.8% instead of 0.7%.
In December, if petroleum and coal prices were excluded, the IPPI would have increased 0.4%, following gains of 0.1% in October and 0.2% in November.
12-month change in the IPPI: The upward trend continues
The IPPI rose 2.9% in December compared with the same month a year earlier, after advancing 2.2% in November. The upward trend continued with the index posting its ninth consecutive year-over-year increase.
In the past 12 months, the upward pressure on the IPPI has come mainly from higher prices for petroleum and coal products (+13.7%), primary metal products (+11.4%) and, to a lesser extent, chemical products (+1.9%) and fruits, vegetables and feeds (+2.5%).
The 4.6% increase in the value of the Canadian dollar relative to the US dollar dampened the IPPI year-over-year advance in December. Without the impact of the exchange rate, the IPPI would have risen 3.9% instead of 2.9%.
Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 2.4% in December 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 1.6% in December, the same growth rate as in November and the eighth consecutive year-over-year advance.
Raw Materials Price Index: Strong upward trend
The Raw Materials Price Index (RMPI) rose 4.2% in December, mainly because of higher prices for mineral fuels (+5.6%), non-ferrous metals (+3.9%) and vegetable products (+6.3%). Crude oil prices were up 6.0% in December, following a 7.7% increase in November.
Copper and nickel concentrates (+4.9%) and radioactive products (+12.7%) were the biggest contributors to the advance in non-ferrous metals price index.
Excluding mineral fuels, the RMPI would have increased for the sixth consecutive month, rising 2.9% in December following a 0.6% increase in November.
Compared with the same month a year earlier, the RMPI was up 13.2%, following a 6.9% increase in November. Year-over-year, the RMPI has been on an upward trend since November 2009. Higher prices for mineral fuels (+13.0%), non-ferrous metals (+17.8%) and vegetable products (+28.6%) were the main factors in the RMPI year-over-year advance in December.
Year-over-year, if mineral fuels were excluded, the RMPI would have increased 13.2% in December following an 11.3% advance in November.
Available on CANSIM: tables 329-0056 to 329-0068 and 330-0007.
Table 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 December 2010 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw material price indexes for January will be released on March 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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