Industrial product and raw materials price indexes, November 2020
Prices for products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), fell 0.6% in November, driven mainly by lower prices for lumber and other wood products. Prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), increased 0.6%, mostly because of higher prices for crude energy products and crop products.
Industrial Product Price Index
In November, the IPPI fell 0.6% month over month. Of the 21 major commodity groups, 9 were down, 9 were up, and 3 were unchanged. The largest downward contributor to the monthly decline was the lumber and other wood products (-10.7%), driven mostly by a steep drop in the price of softwood lumber (-21.2%)—the largest monthly decrease on record. The price of softwood lumber exhibited a correction in October and November, after increasing dramatically (+95.9%) from April to September. In spite of the decline, softwood lumber prices in November were 34.4% higher than in November 2019.
Prices for meat, fish and dairy products fell 1.6% in November, mostly as a result of a 15.1% decrease in prices for fresh and frozen pork. Also within the category, prices for fresh and frozen beef and veal increased 5.7%.
Energy and petroleum product prices were up 4.0%. The rise was mostly due to an 8.2% increase in the price of diesel and biodiesel fuels; prices for these products were nonetheless down 32.8% on a year-over-year basis. Prices for light fuel oils rose 9.4%, and motor gasoline prices (+0.4%) were also up. The increase in diesel was attributable to seasonal demand for heating fuel, to demand from transportation, as well as to a rise in the price of crude oil. According to the US Energy Information Administration, the average weekly amount of distillate fuel oil supplied (which includes diesel fuel and light fuel oils) was 3.4% higher in November than in the previous month, yet 3.8% lower when compared with the same month last year.
On a year-over-year basis, the IPPI was flat in November. Lower energy and petroleum product prices (-28.6%) were offset by higher prices for primary non-ferrous metals (+21.0%), and lumber and other wood products (+23.2%).
Raw Materials Price Index
The RMPI increased 0.6% in November. Of the six major commodity groups, three were up and three were down.
The increase in the RMPI was driven mainly by gains in crude energy products and crop products.
Prices for crude energy products rose 2.6%. Within the group, conventional crude oil (+1.7%), natural gas (+6.8%) and synthetic crude oil (+2.2%) recorded price gains. Higher prices for natural gas were partly attributable to supply pressures caused by a decline in shale oil production, as these two products are often extracted in conjunction.
The price of crop products rose 3.2% in November, mostly because of higher prices for canola (+5.9%). This was the ninth consecutive monthly increase of canola prices. In 2020, Canadian canola yield per hectare and total production were at their lowest levels since 2015.
The monthly gain in the RMPI was moderated by decreases in prices for metal ores, concentrates, and scrap (-1.0%), as well as for animals and animal products (-1.5%).
On a year-over-year basis, the RMPI fell 1.7%, mostly as a result of lower prices for crude energy products (-26.5%). This decline was offset by a 27.0% increase in prices for metal ores, concentrates, and scrap.
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.
Basket update and methodology changes
Starting with the October 2020 reference period, the IPPI and RMPI are using an updated basket and methodology. The indexes have been 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 have been modernized with the adoption of a weighted geometric (Jevons) formula and incorporation of parental imputation as the default imputation methodology for missing price quotes.
Statistics Canada launched the Producer price indexes portal as part of a suite of portals for prices and price indexes. This web page 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.
The industrial product and raw materials price indexes for December will be released on January 29, 2021.
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).