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Industrial product and raw materials price indexes, July 2022

Released: 2022-08-18

Chart 1  Chart 1: Prices for industrial products decrease
Prices for industrial products decrease

Industrial Product Price Index

In July, the Industrial Product Price Index declined 2.1% month over month and increased 11.9% year over year.

Prices for energy and petroleum products dropped 11.6% month over month, after posting six consecutive monthly increases. This is the largest monthly decline for the group since April 2020 (-25.3%). Year over year, prices were 57.5% higher compared with July 2021. Diesel fuel (-13.4%) and motor gasoline (-12.6%) were mainly responsible for the decline in this group. These decreases were partially influenced by lower prices for crude oil, as well as reduced refiner margins. According to data from Natural Resources Canada, in July, the refining margin component of the pump price for regular gasoline in Canada fell 18.4%, and the same metric for diesel fell 20.3%. According to data from the U.S. Energy Information Administration (EIA), global consumption of petroleum fell from 99.3 million barrels per day in June to 98.8 million barrels per day in July.

Prices for primary non-ferrous metal products fell 8.9% in July, a fourth consecutive monthly decline. Compared with July 2021, prices were 4.2% lower. This was the first year-over-year drop for the group since July 2019 (-4.6%). Both precious metals and industrial metals led the monthly decrease. Unwrought gold, silver, and platinum group metals and their alloys were down 7.2% in July, which have been falling since April 2022. A variety of industrial metals were also moving downward, including unwrought nickel and nickel alloys (-18.5%), unwrought copper and copper alloys (-15.7%), and unwrought aluminum and aluminum alloys (-5.8%). Lower precious metal prices were mainly affected by a stronger US dollar and higher bond yields, with the Federal Reserve further hiking the interest rate by another 75 basis points in July. Concerns of global economic slowdown with tightening monetary policy also affected demand for industrial metals.

After posting three straight monthly declines, prices of softwood lumber rebounded 6.5% month over month in July. Softwood lumber was still down year over year, down 2.9% compared with July 2021.

Chart 2  Chart 2: Softwood lumber (except tongue and groove and other edge worked lumber)
Softwood lumber (except tongue and groove and other edge worked lumber)

Prices for cement, glass, and other non-metallic mineral products rose 5.3% month over month in July and 12.3% year over year. This was a record-high monthly growth for the commodity group since the January 1982 (+6.2%). The increase was mainly due to higher prices for cement, lime and gypsum products (+6.1%), especially for ready-mixed concrete (+4.9%). Increasing concrete prices are mainly attributable to insufficient domestic supply partially as a result of a shortage of labour, while demand remains strong.

Raw Materials Price Index

In July, the Raw Materials Price Index fell 7.4% month over month and was 19.1% higher compared with July 2021.

Crude energy products (-10.3%) led the monthly decrease in Raw Materials Price Index. This was the largest monthly decline for the group since April 2020 (-47.5%). On a yearly basis, prices were 47.7% higher compared with the same month in 2021. Conventional crude oil fell 11.5%, while synthetic crude oil dropped 8.2% on a monthly basis. Weakening market expectations for global energy demand played a part in the price decline, while oil inventories grew. According to the USEIA, US commercial crude oil stock had a significant increase of 4.5 million barrels in the last week of July from the prior week.

Prices for metal ores, concentrates and scrap fell 7.8% month over month and 7.3% year over year, led by lower prices for gold, silver, and platinum group metal ores and concentrates (-6.5%). Prices for lead and zinc ores and concentrates (-11.1%) and copper ores and concentrates (-16.4%) also posted monthly decreases in July.

Prices for crop products (-10.7%) dropped for a second straight month. Prices for canola fell 16.6% in July, the largest monthly decline since July 1984 (-17.3%). On a yearly basis, canola prices were 3.5% lower compared with July 2021, the first year-over-year decrease since March 2020 (-0.8%). The price of wheat fell 20.4% in July. The sharp drop followed an agreement made between Russia and Ukraine to allow grain exports to resume from Ukrainian Black Sea ports.

Chart 3  Chart 3: Prices for raw materials fall
Prices for raw materials fall



  Note to readers

The Industrial Product Price Index (IPPI) and the 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 IPPI 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. This is particularly 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 RMPI 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.

Products

The product "Industrial Product Price Index: 2021 Annual Review" is now available. This document is a review of how producer prices, as measured by the IPPI, changed in 2021 compared with 2020. The year 2021 faced a multitude of factors influencing prices, many of which stemmed from the COVID-19 pandemic. Economies reopened slowly as lockdowns were lifted and vaccinations became available, driving up demand.

Statistics Canada 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.

Addition of a new table and additional data

Effective February 28, 2022, table 18-10-0272-01 has been added to the Statistics Canada website featuring regional indexes for select refined petroleum products. In addition, tables 18-10-0266-01 and 18-10-0268-01 now contain data for select 6- and 7-digit North American Product Classification System series.

Next release

The industrial product and raw materials price indexes for August will be released on September 19.

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; infostats@statcan.gc.ca) or Media Relations (statcan.mediahotline-ligneinfomedias.statcan@statcan.gc.ca).

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