Industrial product and raw materials price indexes, August 2018
Prices for products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), decreased 0.5% in August, mainly due to lower prices for primary non-ferrous metal products. Prices for raw materials purchased by Canadian manufacturers, as measured by the Raw Materials Price Index (RMPI), fell 4.6%, largely reflecting lower prices for crude energy products.
Industrial Product Price Index, monthly change
The IPPI fell 0.5% in August, following a 0.2% decrease in July. Of the 21 major commodity groups, 12 were down, 7 were up and 2 were unchanged.
The decrease in the IPPI was mainly due to lower prices for primary non-ferrous metal products (-3.4%), which posted their largest decline since July 2017. Lower prices for unwrought precious metals and precious metal alloys (-3.9%), unwrought aluminum and aluminum alloys (-5.8%) and unwrought copper and copper alloys (-4.0%) were mostly responsible for the decline in this commodity group.
Meat, fish and dairy products (-2.1%) also contributed significantly to the decline in the IPPI, mainly due to lower prices for fresh and frozen pork (-6.6%). Prices for processed meat products, other meats and animal by-products (-3.6%) and fresh and frozen beef and veal (-2.2%) also pulled this commodity group downward, but to a lesser extent.
Energy and petroleum products (-0.5%) decreased for a third consecutive month in August, mainly due to lower prices for motor gasoline (-1.7%) and, to a lesser extent, diesel fuel (-1.3%). The IPPI excluding energy and petroleum products was also down 0.5%.
Lumber and other wood products (-2.0%) also fell from July, the first decline for this commodity group in 2018. The decline was mainly attributable to lower prices for softwood lumber (except tongue and groove and other edge worked lumber) (-9.8%), reconstituted wood products (-3.2%) and veneer and plywood (-4.8%).
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 July to August, the Canadian dollar rose 0.7% relative to the US dollar. If the exchange rate had remained constant, the IPPI would have decreased 0.3% instead of 0.5%.
Industrial Product Price Index, 12-month change
The IPPI rose 5.8% over the 12-month period ending in August, after increasing 6.7% in July. The gain in the IPPI was widespread; only meat, fish and dairy products were down compared with August 2017.
Compared with August 2017, the growth in the IPPI was mainly attributable to higher prices for energy and petroleum products (+23.6%). The gain in this commodity group was primarily due to higher prices for motor gasoline (+20.9%), light fuel oils (+32.4%) and diesel fuel (+29.1%). The IPPI excluding energy and petroleum products rose 3.3% year over year.
Pulp and paper products (+15.8%) and primary ferrous metal products (+15.7%) also contributed to the year-over-year increase in the IPPI, but to a lesser extent.
The growth in pulp and paper products was mainly the result of higher prices for wood pulp (+24.8%) and newsprint (+29.7%). Prices for iron and steel basic shapes (+19.4%) and wire and other rolled and drawn steel products (+19.9%) were mainly responsible for the increase in primary ferrous metal products.
Chemicals and chemical products (+4.3%) saw year-over-year growth for a third consecutive month in August, mainly on account of higher prices for petrochemicals (+23.6%).
Compared with the same month in 2017, meat, fish and dairy products fell 3.1%, mostly due to lower prices for fresh and frozen pork (-10.0%).
Raw Materials Price Index, monthly change
The RMPI declined 4.6% in August, after increasing 0.7% in July. This was the largest decline in the RMPI since December 2015. Of the six major commodity groups, four were down and two were up.
Lower prices for crude energy products (-5.5%), particularly conventional crude oil (-5.6%), drove the RMPI down in August. The RMPI excluding crude energy products fell 3.8%.
Animals and animal products (-7.3%) also contributed to the decrease in the RMPI. The decline in this commodity group was primarily due to lower prices for hogs (-28.6%), which posted their largest drop since November 1998.
Prices for metal ores, concentrates and scrap (-3.9%) were also down compared with July.
Raw Materials Price Index, 12-month change
Compared with the same month a year earlier, the RMPI rose 15.5% in August, following a 22.2% increase in July.
The year-over-year growth in the RMPI in August was almost entirely driven by higher prices for crude energy products (+40.7%). Conventional crude oil (+42.1%) was the main source of this increase. Year over year, the RMPI excluding crude energy products was down 1.2%.
Prices for animals and animal products (-6.8%), especially hogs (-29.4%) slightly offset the year-over-year increase in the RMPI in August.
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 October 9.
The industrial product and raw materials price indexes for September will be released on October 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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