Industrial product and raw materials price indexes, May 2020
Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), rose 1.2% in May, driven mainly by higher prices for meat, fish and dairy products as well as energy and petroleum products. Prices for raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), increased 16.4%, mainly on higher crude oil prices.
Industrial Product Price Index
In May, the IPPI rose 1.2%, after four consecutive months of decline. This was the first increase in 2020 for the IPPI. The IPPI excluding energy and petroleum products was up 0.8%. Of the 21 major commodity groups, 6 were up, 11 were down and 4 were unchanged.
The May increase in the IPPI was largely attributable to higher prices for meat, fish and dairy products (+8.3%). Higher prices for meat products (+13.3%), especially fresh and frozen pork (+31.3%)—which posted its largest monthly growth ever—were behind this gain. Prices for fresh and frozen beef and veal (+7.5%) as well as processed meat products, other meats and animal by-products (+7.5%) also rose compared with April. Disruptions in the supply chain due to the COVID-19 pandemic and increased demand for meat products contributed to the increase in this commodity group.
Energy and petroleum products also drove the IPPI upward in May, with prices increasing 4.6%, following strong declines in April (-22.3%) and March (-18.1%). This gain was led by sharply higher prices for motor gasoline (+36.8%). However, when compared with the same period in 2019, gasoline prices were down 43.6%. The monthly increase in gasoline coincided with renewed demand due to the gradual easing of lockdown measures in many countries, and was due in part to higher crude oil prices.
Conversely, prices for other refined petroleum products, such as light fuel oils (-10.1%) and diesel (-7.1%), continued their downward trend that began in January 2020. Excess supply by refiners adversely affected refining margins for these products, causing prices to fall.
Primary non-ferrous metal products (+1.5%) were up for a second consecutive month in May, mostly due to higher prices for unwrought silver and silver alloys (+7.2%). Prices for unwrought copper and copper alloys (+3.1%), which rose for the first time since January 2020, also contributed to the gain in this commodity group, but to a lesser extent.
Year over year, the IPPI fell 4.9% in May, pulled downward primarily by lower prices for energy and petroleum products (-43.0%). Prices for meat, fish and dairy products (+10.7%) were the main factor moderating the decline.
Raw Materials Price Index
The RMPI rose 16.4% on a monthly basis in May, after four straight months of decline. Of the six major commodity groups, five were up and one was down.
The growth in the RMPI in May was mainly due to higher prices for crude energy products (+73.5%). In this group, conventional crude oil (+81.8%) posted its largest monthly increase on record. The oil market was buoyed by restrictions to global oil supply by major oil-producing countries and by a partial renewal in demand following gradual easing of COVID-19 lockdown measures.
The RMPI excluding crude energy products increased 1.8%. Prices for animals and animal products (+4.1%), particularly hogs (+21.0%), were mainly responsible for this gain. The gradual increase in processing capacity in slaughterhouses and higher demand for meat products may have contributed to this growth.
Compared with May 2019, the RMPI decreased 24.3%, led mostly by lower prices for crude energy products (-50.9%).
Impact of COVID-19 on the Industrial Product and Raw Materials Price Indexes
IPPI and RMPI data are collected through an electronic questionnaire as well as other electronic sources. The majority of respondents have continued to report throughout the pandemic. For the preliminary release of May 2020 data, the survey response rate was 81%, a modest decline from May 2019 (84%). Statistics Canada extends its appreciation to the dedicated survey respondents who continue to report to the Industrial Products and Raw Materials Price Report.
In some cases, respondents may not be able to report a price for one or more of their products. This is particularly true in the context of the current pandemic due to temporary closures of some manufacturing facilities and/or an absence of purchase orders from manufacturers' clients. Missing prices are imputed, either by carrying forward the previously reported price, or by reflecting the price movement of other products within the same detailed product category.
Compared with one year earlier, the weighted imputation rate has risen by 4% for the IPPI and 1% for the RMPI. While the impact on the overall IPPI and RMPI is modest, the rise in imputation rate was particularly concentrated among products classified within several product groups. As a result, Statistics Canada has added data quality indicators to the affected series on our data tables. The affected product groups are:
IPPI Textile and leather products
IPPI Clothing, footwear and accessories
IPPI Lumber and other wood products
IPPI Electrical, electronic, audiovisual and telecommunication products
RMPI Logs, pulpwood, natural rubber and other forestry products
The IPPI and RMPI maintain a revision policy that will allow additional prices to be collected for the next six months. It is anticipated that the imputation rate for these indexes will fall as more prices are collected. Data quality indicators will be reviewed monthly and updated with each data release.
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. The IPPI 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 the good. This includes transportation, wholesale and retail costs.
Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, and these prices 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 to 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.
Upcoming changes: Basket update and methodology changes
Changes will be coming to the IPPI and RMPI in the fall of 2020. The indexes will be converted from 2010 = 100 to January 2020 = 100 and also updated to use a weighting pattern based on the 2016 production values of Canadian manufacturers.
At the same time, the IPPI and RMPI will be modernized with the adoption of a weighted geometric (Jevons) formula and incorporation of parental imputation as the default imputation methodology for missing price quotes.
Commencing with the release of the new basket in the fall, the IPPI and RMPI will be released using the North American Product Classification System (NAPCS) Canada 2017 version 2.0 and the North American Industry Classification System (NAICS) Canada 2017 version 3.0. Product indexes will be published at the class (five-digit) level. The current vectors will be terminated, and new tables based on the updated classification systems will appear in the Statistics Canada tables.
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 July 13.
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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