Industrial product and raw materials price indexes, December 2019
Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), edged up 0.1% in December, driven primarily by higher prices for primary non-ferrous metal products. Prices for raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), rose 2.8%, mainly due to higher prices for crude energy products.
Industrial Product Price Index
In December, the Industrial Product Price Index (IPPI) was up 0.1%, following a 0.1% decline in November. The IPPI excluding energy and petroleum products also rose 0.1%.
Of the 21 major commodity groups, 7 were up, 12 were down, and 2 were unchanged.
The growth of the IPPI in December was mainly driven by higher prices for primary non-ferrous metal products (+1.2%). The increase in this commodity group was mostly attributable to higher prices for unwrought silver and silver alloys (+11.7%), which posted their strongest monthly increase since July 2016 (+13.4%).
Prices for chemicals and chemical products (+0.5%) and energy and petroleum (+0.3%) products also contributed to the increase in the IPPI, but to a lesser extent.
Conversely, prices for motorized and recreational vehicles (-0.3%) and meat, fish and dairy products (-0.5%) were down from November.
Compared with December 2018, the IPPI rose 0.3%, mainly due to higher prices for energy and petroleum products (+5.6%) and meat, fish and dairy products (+3.1%). This increase was moderated by lower prices for pulp and paper (-9.6%) and primary ferrous metal (-7.9%) products.
Raw Materials Price Index
The Raw Materials Price Index (RMPI) rose 2.8% in December, after posting a 1.4% gain the previous month. Of the RMPI's six major commodity groups, five were up and one was down.
The increase in the RMPI was led mainly by higher prices for crude energy products (+5.4%), particularly conventional crude oil (+5.5%). A new agreement to cut oil production by the Organization of the Petroleum Exporting Countries and its allies in December, along with the start of easing trade tensions between China and the United States, contributed to this increase.
The RMPI excluding crude energy products was up 0.7%, led primarily by higher prices for animals and animal products (+1.3%) and metal ores, concentrates and scrap (+0.7%).
On a year-over-year basis, the RMPI rose 7.9%, driven mostly by higher prices for crude energy products (+18.8%). Conventional crude oil (+19.8%) was the main source of this gain.
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 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 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 and paper products, and wood products. Therefore, fluctuations in the value of the Canadian dollar against its US counterpart affect the IPPI. However, the conversion into Canadian dollars reflects only how respondents provide their prices. This is not a measure that takes into account the full effect of exchange rates.
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.
The product "Industrial Product Price Index: Annual review, 2019" is now available. This document is a review of how producer prices, as measured by the Industrial Product Price Index (IPPI), changed in 2019 when compared with 2018. Structural changes in in the manufacturing sector, international trade relations, market shocks, as well as macroeconomic sentiment all played roles in influencing the prices of the components of the index. Prices for energy products, non-ferrous metals, food and chemical products contributed the most to the change in the IPPI in 2019.
Statistics Canada has launched the Producer Price Indexes Portal as part of a suite of portals for prices and price indexes. This webpage provides Canadians with a single point of access to a variety of statistics and measures related to producer prices.
The video "Producer Price Indexes" is available on the Statistics Canada Training Institute webpage. It provides an introduction to Statistics Canada's producer price indexes—what they are, how they are made and what they are used for.
Real-time table 18-10-0248-01 will be updated on February 10.
The industrial product and raw materials price indexes for January 2020 will be released on February 28.
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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