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Industrial product and raw materials price indexes, September 2018

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Released: 2018-10-31

Prices of products sold by Canadian manufacturers, as measured by the Industrial Product Price Index (IPPI), edged up 0.1% in September. Higher prices for chemicals and chemical products and energy and petroleum products were largely offset by 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), decreased 0.9%, primarily due to lower prices for crude energy products.

Chart 1  Chart 1: Prices for industrial goods increase
Prices for industrial goods increase

Industrial Product Price Index, monthly change

The IPPI edged up 0.1% in September, after falling 0.5% in August. Of the 21 major commodity groups, 10 were up, 7 were down and 4 were unchanged.

Chemicals and chemical products (+1.6%) contributed the most to the growth in the IPPI in September, mostly on account of higher prices for petrochemicals (+6.3%). Increased demand for ethylene on the US Gulf Coast was the main reason for higher prices for petrochemicals. Ammonia and chemical fertilizers (+3.9%) and other basic inorganic chemicals (+1.4%) also drove up the prices of chemicals and chemical products.

Prices for energy and petroleum products (+0.8%), particularly diesel fuel (+2.7%) and light fuel oils (+1.7%), also contributed significantly to the increase in the IPPI. However, lower prices for motor gasoline (-0.5%) limited the increase in energy and petroleum products. The IPPI excluding energy and petroleum products also rose 0.1%.

Primary non-ferrous metal products (-1.6%), which were down for the third consecutive month, mostly offset the increase in the IPPI. Lower prices for unwrought precious metals and precious metal alloys (-1.9%) and unwrought aluminum and aluminum alloys (-4.3%) were mainly responsible for the decline in this commodity group.

Meat, fish, and dairy products were down 0.7% in September, following a 2.1% decline in August. This decrease was mainly due to lower prices for fresh and frozen beef and veal (-2.4%), as well as processed meat products, other meats and animal by-products (-1.9%).

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 August to September, the Canadian dollar was unchanged relative to the US dollar.

Industrial Product Price Index, 12-month change

Compared with the same month a year earlier, the IPPI rose 6.2% in September, following a 5.7% increase in August.

Compared with September 2017, the growth in the IPPI was mainly attributable to higher prices for energy and petroleum products (+19.2%), which have been increasing year over year since December 2016. Higher prices for motor gasoline (+16.0%), light fuel oils (+27.4%), and diesel fuel (+26.5%) were mostly behind this gain. The IPPI excluding energy and petroleum products rose 4.3% year over year.

Pulp and paper products (+18.0%) and motorized and recreational vehicles (+3.9%) also contributed to the rise in the IPPI compared with September 2017, though to a lesser extent.

The gain in pulp and paper products was mainly attributable to higher prices for wood pulp (+27.0%) and newsprint (+33.3%). Growth in motorized and recreational vehicles was essentially due to higher prices for passenger cars and light trucks (+2.4%), motor vehicle engines and motor vehicle parts (+4.5%), and aircraft (+7.9%).

Chemicals and chemical products (+7.2%) saw year-over-year growth for a fourth consecutive month in September, driven by higher prices for petrochemicals (+29.6%).

Primary non-ferrous metal products (-2.6%), particularly unwrought precious metals and precious metal alloys (-7.3%), slightly moderated the growth in the IPPI compared with September 2017.

Raw Materials Price Index, monthly change

The RMPI fell 0.9% in September, after decreasing 4.8% in August. Of the six major commodity groups, five were down and one was up.

Crude energy products were largely responsible for the decrease in the RMPI in September, with prices falling 0.8%, following a 5.8% decline in August. This decrease was mainly led by lower prices for conventional crude oil (-0.7%). The RMPI excluding crude energy products fell 1.0%.

Metal ores, concentrates, and scrap (-1.1%) was another key contributor to the decline in the RMPI, particularly due to lower prices for waste and scrap of metal (-5.2%). This was the third consecutive monthly decrease in this commodity group.

Animals and animal products were down 1.2% in September, after decreasing 7.3% the previous month. Prices for live animals (-2.2%), especially hogs (-4.5%), were primarily responsible for the decline in this commodity group.

Chart 2  Chart 2: Prices for raw materials decrease
Prices for raw materials decrease

Raw Materials Price Index, 12-month change

The RMPI rose 14.6% over the 12-month period ending in September, following a 15.4% increase in August.

The growth in the RMPI compared with September 2017 was almost entirely led by higher prices for crude energy products (+33.8%), particularly conventional crude oil (+35.0%). Year over year, the RMPI excluding crude energy products rose 1.1%.

Logs, pulpwood, natural rubber and other forestry products (+7.7%), as well as crop products (+1.9%), also rose year over year in September.



  Note to readers

The Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) are available at the Canada level only. Selected commodity groups within the IPPI are also available by region.

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 (Catalogue number62F0014M), 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?

Infographic: Producer Price Indexes at a Glance

The infographic "Producer Price Indexes at a Glance," which is part of Statistics Canada — Infographics (Catalogue number11-627-M), demonstrates how producer price indexes for goods and services are calculated and why they are important for the Canadian economy.

Real-time table

Real-time table 18-10-0248-01 will be updated on November 13.

Next release

The industrial product and raw materials price indexes for October will be released on November 30.

Contact information

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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