Industrial product and raw materials price indexes, July 2016
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The Industrial Product Price Index (IPPI) rose 0.2% in July. Higher prices for primary non-ferrous metal products were largely moderated by a decline in prices for energy and petroleum products. The Raw Materials Price Index (RMPI) decreased 2.7%, as a result of lower prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI edged up 0.2% in July, after rising 0.7% in June. Of the 21 major commodity groups, 13 were up, 5 were down and 3 were unchanged.
The largest downward contribution to the IPPI in July came from energy and petroleum products (-3.5%), which posted their first decline since February 2016 (-4.1%). The fall was led by lower prices for motor gasoline (-6.4%) and, to a lesser extent, diesel fuel (-4.2%) and light fuel oils (-3.4%). The IPPI excluding energy and petroleum products rose 0.7% in July.
Largely moderating the downward pressure from energy and petroleum products were higher prices for primary non-ferrous metal products (+5.3%). This was the largest increase for this commodity group since September 2012, when prices rose 8.8%. The gain in July was mainly attributable to higher prices for unwrought precious metals and precious metal alloys (+8.6%), notably unwrought silver and silver alloys (+13.4%), other unwrought precious metals and precious metal alloys (+7.5%), and unwrought gold and gold alloys (+5.6%). Given the financial market volatility following Britain's decision to leave the European Union, prices for precious metals increased as investors pursued safe-haven assets such as gold and silver.
Primary ferrous metals (+1.0%) also rose in July, but to a much lesser extent than non-ferrous metals. The increase in primary ferrous metals was mostly attributable to higher prices for wire and other rolled and drawn steel products (+3.0%).
Also contributing to the increase in the IPPI were motorized and recreational vehicles (+0.8%). The gain was mainly due to higher prices for passenger cars and light trucks (+0.7%), motor vehicle engines and motor vehicle parts (+0.6%), and aircraft (+1.3%). Higher prices for motorized and recreational vehicles were closely linked to the depreciation of the Canadian dollar relative to the US dollar.
Meat, fish, and dairy products declined 0.6% in July, after increasing 1.5% in June, as prices for both fresh and frozen pork (-3.0%) and fresh and frozen beef and veal (-1.1%) fell.
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 June to July, the Canadian dollar depreciated 1.2% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have declined 0.1% instead of rising 0.2%.
Industrial Product Price Index, 12-month change
The IPPI declined 1.3% over the 12-month period ending in July, after falling 0.8% in June.
The year-over-year decrease in the IPPI was largely attributable to lower prices for energy and petroleum products (-13.0%). Motor gasoline (-17.1%), diesel fuel (-8.9%), light fuel oils (-6.1%) and heavy fuel oils (-14.9%) were the main reasons for the decline in prices for energy and petroleum products. The IPPI excluding energy and petroleum products rose 0.5% in July from the same month last year.
Lower prices for chemicals and chemical products (-5.5%), specifically petrochemicals (-18.7%) and ammonia and chemical fertilizers (-17.9%), also contributed to the year-over-year decline in the IPPI.
Moderating the year-over-year decline in the IPPI were higher prices for primary non-ferrous metal products (+5.4%). The main reason for the increase was unwrought precious metals and precious metal alloys (+19.0%), specifically unwrought silver and silver alloys (+30.7%) and unwrought gold and gold alloys (+20.2%). Slightly moderating the rise in this commodity group were lower prices for unwrought copper and copper alloys (-8.7%).
Raw Materials Price Index, monthly change
The RMPI fell 2.7% in July, after gaining 2.0% in June. Of the six major commodity groups, three were up and three were down.
The decline in the RMPI was mainly attributable to lower prices for crude energy products (-8.4%), specifically conventional crude oil (-8.7%). Prices for natural gas rose 10.8%, posting their largest gain since March 2014. The increase was partly due to above-average temperatures in North America in July, resulting in higher demand for gas-fired electric power generation. The RMPI excluding crude energy products rose 1.3%.
Largely moderating this decline were higher prices for metal ores, concentrates and scrap (+5.1%). This was the largest increase in this commodity group since September 2012, when prices rose 9.8%.
Prices for animals and animal products fell 1.3% in July, as a result of lower prices for cattle and calves (-3.7%) and, to a lesser extent, hogs (-1.9%). This was the sixth consecutive monthly decline for the price of cattle and calves.
Raw Materials Price Index, 12-month change
The RMPI declined 5.7% over the 12-month period ending in July.
Lower prices for crude energy products (-11.6%), specifically conventional crude oil (-11.6%), were largely responsible for the decrease in the RMPI. The RMPI excluding crude energy products declined 1.5%.
To a lesser extent, lower prices for animals and animal products (-7.3%) also contributed to the year-over-year decline in the RMPI. The decrease in this commodity group was primarily led by lower prices for cattle and calves (-25.4%).
A year-over-year gain in prices for metal ores, concentrates and scrap (+3.4%) helped moderate the decline in the RMPI.
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 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 available in CANSIM 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.
Infographic: Producer Price Indexes at a Glance
The infographic, "Producer Price Indexes at a Glance," which is part of Statistics Canada — Infographics (), is available. This infographic demonstrates how producer price indexes for goods and services are calculated and why they are important for the Canadian economy. 11-627-M
Real-time CANSIM tables
The industrial product and raw materials price indexes for August will be released on September 30.
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).