Industrial product and raw materials price indexes, December 2015
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The Industrial Product Price Index (IPPI) declined 0.2% in December, mainly as a result of lower prices for energy and petroleum products. The Raw Materials Price Index (RMPI) fell 5.0%, led by lower prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI (-0.2%) fell for the fifth consecutive month in December and has declined 1.7% since July 2015. Among the 21 major commodity groups, 5 were down and 16 were up.
The main reason for the decline in the IPPI in December was energy and petroleum products (-5.4%), which posted its largest decrease since January 2015 when prices fell 11.1%. Lower prices for motor gasoline (-4.5%), diesel fuel (-8.3%), light fuel oils (-8.3%), and heavy fuel oils (-11.5%) were the main reasons for the decline in this commodity group. The IPPI excluding energy and petroleum products increased 0.6% in December.
Also contributing to the decline in the IPPI were lower prices for meat, fish, and dairy products (-1.5%), specifically fresh and frozen pork (-6.5%) and, to a lesser extent, fresh and frozen beef and veal (-0.8%). After posting 20 consecutive increases between November 2013 and June 2015, prices for fresh and frozen beef and veal have declined 8.1% since June.
Prices for primary ferrous metal products (-1.8%) also declined in December, led by lower prices for iron and steel basic shapes (-3.0%).
Largely moderating the decline in the IPPI were higher prices for motorized and recreational vehicles (+2.1%), specifically passenger cars and light trucks (+2.1%), motor vehicle engines and motor vehicle parts (+1.6%) as well as aircraft (+3.2%). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.
Also moderating the decline, but to a lesser extent, was primary non-ferrous metal products (+1.4%). The increase in the commodity group was primarily attributable to higher prices for unwrought aluminum and aluminum alloys (+4.7%) as well as unwrought precious metals and precious metal alloys (+0.7%), specifically unwrought gold and gold alloys (+2.1%).
Some IPPI prices are reported in US dollars and are converted to Canadian dollars using the average monthly exchange rate. Consequently, any change in the value of the Canadian dollar relative to the US dollar will affect the level of the index. From November to December 2015, the Canadian dollar depreciated 3.2% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have fallen 0.9% instead of decreasing 0.2%.
Industrial Product Price Index, 12-month change
The IPPI rose 1.1% over the 12-month period ending in December, posting its largest year-over-year gain since November 2014.
The main reason for the increase in the IPPI was motorized and recreational vehicles (+12.6%), specifically higher year-over-year prices for passenger cars and light trucks (+13.7%), motor vehicle parts and motor vehicle engines (+8.0%) as well as aircraft (+19.4%).
Also contributing to the increase in the IPPI was higher prices for electrical, electronic, audiovisual, and telecommunication products (+6.8%), specifically electronic and electrical parts (+10.6%) and communication and audio and video equipment (+6.0%).
Lower year-over-year prices for energy and petroleum products (-14.3%) largely moderated the increase in the IPPI. Prices for diesel fuel (-21.5%), light fuel oils (-19.9%), heavy fuel oils (-33.3%) as well as motor gasoline (-4.0%) were the main reasons for the decline.
Also moderating the increase were lower year-over-year prices for primary ferrous metal products (-7.1%), led by lower prices for iron and steel basic shapes (-9.2%), and wire and other rolled and drawn steel products (-5.8%).
Raw Materials Price Index, monthly change
The RMPI declined 5.0% in December, after falling 4.1% in November. Of the six major commodity groups, three were up and three were down.
The main reason for the decline in the RMPI were lower prices for crude energy products (-11.9%), specifically conventional crude oil (-12.4%). The RMPI excluding crude energy products fell 0.4%.
Also contributing to the decline in the RMPI were lower prices for animals and animal products (-2.0%), primarily attributable to lower prices for hogs (-6.0%) and cattle and calves (-2.8%).
Raw Materials Price Index, 12-month change
The RMPI declined 14.1% over the 12-month period ending in December.
Lower prices for crude energy products (-25.6%) were largely responsible for the decrease, specifically conventional crude oil (-26.5%). The RMPI excluding crude energy products declined 5.6% from the same month a year earlier.
Prices for animals and animal products (-9.2%) also contributed to the decline in the RMPI, specifically hogs (-22.9%) and cattle and calves (-13.6%).
Note to readers
With each release, data for the previous six months may have been revised. The indexes are not seasonally adjusted.
The Industrial Product Price Index 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. However, the conversion into Canadian dollars only reflects how respondents provide their prices. This is not a measure that takes the full effect of exchange rates into account.
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 Raw Materials Price Index 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.
Real-time CANSIM tables
The industrial product and raw materials price indexes for January will be released on February 29.
For more information, or to enquire about the concepts, methods or data quality of this release, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca) or Media Relations (613-951-4636; STATCAN.mediahotline-ligneinfomedias.STATCAN@canada.ca).
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