Industrial product and raw materials price indexes, May 2018
Prices of products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), increased 1.0% in May, mainly due to higher prices for energy and petroleum products. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), rose 3.8%, primarily due to higher prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI increased 1.0% following a 0.4% increase in April. This is the largest monthly increase since November 2017. Of the 21 major commodity groups, 17 were up, 1 was down and 3 were unchanged.
The increase in the IPPI was primarily due to higher prices for energy and petroleum products (+4.0%). In particular, prices rose for motor gasoline (+4.1%), light fuel oils (+5.5%) and diesel fuel (+5.5%). Higher prices and increased demand for crude oil continue to apply upward pressure on petroleum prices. The IPPI excluding energy and petroleum products increased 0.5% from April to May.
Prices for lumber and other wood products increased 3.1% in May, led by a 5.1% gain in lumber and other sawmill products. Engineered wood members and trusses (+11.6%), reconstituted wood products (+6.1%) and softwood lumber (except tongue and groove and other edge worked lumber) (+7.3%) were the main contributors to the increase in lumber and other sawmill products. Increased housing construction in the United States continued to drive prices higher for these products.
Increases were posted across all three major metal commodity groups.
Prices for fabricated metal products and construction materials rose 1.9% from April to May. The largest contributor to the price increase in this commodity group was fabricated metal products (+2.7%), specifically, forged and stamped metal products (+6.3%). These increases were attributed to higher costs for inputs.
Price gains for primary non-ferrous metal products (+0.7%) were mostly due to aluminum products. Prices for unwrought aluminum and aluminum alloys were up 2.2%, while basic and semi-finished products of aluminum and aluminum alloys increased 1.7%. The gain was partly offset by decreases in unwrought precious metals and precious metal alloys (-0.4%).
Prices for primary ferrous metal products increased 1.5%. The main contributor to this increase was wire and other rolled and drawn steel products (+3.2%). To a lesser extent, higher prices for iron and steel basic shapes (+1.2%), iron and steel pipes and tubes (+0.2%) and ferrous metal castings (0.1%) also contributed to the rise.
From April to May, prices increased for meat, fish, and dairy products (+0.3%), specifically, meat products (+0.5%). Prices for fresh and frozen pork increased 1.6%, while prices for fresh and frozen beef and veal were up 1.3%.
Some IPPI prices are reported in US dollars and 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 April to May, the Canadian dollar fell 1.1% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have increased 0.8% instead of 1.0%.
Industrial Product Price Index, 12-month change
The IPPI rose 3.1% over the 12-month period ending in May, following a 2.3% increase in April.
Compared with May 2017, the gains in the IPPI were largely attributable to higher prices for energy and petroleum products (+23.7%). Higher prices for motor gasoline (+25.4%), light fuel oils (+31.9%) and diesel fuel (+33.1%) were largely responsible for the increase in this commodity group. The IPPI excluding energy and petroleum products increased 0.2% year over year.
To a lesser extent, pulp and paper products (+9.8%) also contributed to the year-over-year increase in the IPPI. This increase was mainly the result of higher prices for wood pulp (+20.0%).
Primary non-ferrous metal products rose 3.9% compared with May 2017, mainly due to higher prices for other unwrought non-ferrous metals and non-ferrous metal alloys (+15.0%) and unwrought copper and copper alloys (+15.4%).
The year-over-year increase in the IPPI was somewhat offset by lower prices for motorized and recreational vehicles (-4.3%), particularly prices for passenger cars and light trucks (-5.4%). Prices for passenger cars and light trucks are closely linked to the US exchange rate. From May 2017 to May 2018, the Canadian dollar appreciated, resulting in a decrease in prices for these products.
Raw Materials Price Index, monthly change
The RMPI rose 3.8% in May, after increasing 0.8% in April. Of the six major commodity groups, four were up and two were down.
The increase in the RMPI in May was mainly due to higher prices for crude energy products (+7.0%). Conventional crude oil prices rose 7.2%, following a 3.2% increase the previous month. The RMPI excluding crude energy products increased by 1.1%.
Prices for animals and animal products increased by 2.6%, primarily due to higher prices for hogs (+17.8%). This follows decreases in April (-14.2%) and March (-8.9%). Prices for live poultry were up 1.9%, while prices for cattle and calves (-0.6%) and fish, shellfish and other fishery products (-3.6%) declined in May.
Increases in crop products (+1.7%) were the result of higher prices in wheat (+3.3%), soybeans (+3.6%) and grain corn (+4.1%). These products typically have higher prices at the beginning of the growing season.
Metal ores, concentrates and scrap decreased 0.4%.
Raw Materials Price Index, 12-month change
The RMPI rose 15.1% over the 12-month period ending in May, following a 9.0% year-over-year increase in April.
The increase in the RMPI compared with May 2017 was primarily due to higher prices for crude energy products (+35.2%). Conventional crude oil (+36.1%) was mainly responsible for the increase in this commodity group. On a year-over-year basis, the RMPI excluding crude energy products rose 1.0%.
To a lesser extent, higher prices for metal ores, concentrates and scrap (+5.8%) also contributed to the year-over-year increase in the RMPI.
Compared with the same month last year, the increase in the RMPI was partially offset by decreasing prices for animals and animal products (-6.6%). Prices declined for live animals (-10.5%), including hogs (-12.7%) and cattle and calves (-13.1%).
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 established by the Bank of Canada and available in table 33-10-0163-01 (series v111666275). 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.
A Historical Timeline of Canadian Producer Price Statistics
The publication "A Historical Timeline of Canadian Producer Price Statistics," which is part of the Prices Analytical Series (), was created to showcase the key milestones in the history of Canadian producer price statistics. This historical timeline contains answers to questions such as: Who collected Canada's first statistics? What do Canadian producer price indexes measure? 62F0014M
Infographic: Producer Price Indexes at a Glance
The infographic "Producer Price Indexes at a Glance," which is part of Statistics Canada — Infographics (), 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 table 18-10-0248-01 will be updated on July 9.
The industrial product and raw materials price indexes for June will be released on July 31.
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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