Industrial product and raw materials price indexes, May 2023
Prices of products manufactured in Canada, as measured by the Industrial Product Price Index (IPPI), fell 1.0% month over month in May and were 6.3% lower than May 2022. In May 2023, prices of raw materials purchased by manufacturers operating in Canada, as measured by the Raw Materials Price Index (RMPI), decreased 4.9% on a monthly basis and fell 18.4% year over year.
Industrial Product Price Index
The IPPI declined 1.0% month over month in May, following a 0.6% decrease in April. Compared with May 2022, the index was down 6.3%. This is the largest year-over-year decline since October 2009 (-6.5%).
Prices for energy and petroleum products (-5.9%) fell for a fourth consecutive month in May 2023, leading the monthly decrease in the IPPI. Compared with May 2022, prices were down 33.2%, the largest year-over-year drop since May 2020 (-45.8%). Lower prices for diesel fuel (-8.5%) and finished motor gasoline (-2.9%) were mainly responsible for the decline in the energy and petroleum products group in May 2023. Light fuel oils (-14.5%) and jet fuel (-14.5%) also posted a monthly decrease in May. These decreases were mainly due to lower prices for crude oil. In spite of production cuts by OPEC+, prices were subdued by negative sentiments regarding global macroeconomic conditions.
Prices for primary non-ferrous metal products fell 2.8% in May, after posting a 1.8% increase in the previous month. On a yearly basis, the prices declined 2.0% in May. Lower prices were widespread among industrial metals, including unwrought copper and copper alloys (-6.5%), unwrought nickel and nickel alloys (-7.0%) and unwrought zinc and zinc alloys (-10.4%). Lower prices for industrial metals were partially attributable to slowing global economic conditions and output surpassing demand, especially in China. According to the Chinese National Bureau of Statistics, the manufacturing purchasing managers' index (PMI) continued to fall in May, signalling a contraction of the manufacturing sector in China.
Prices for primary ferrous metal products (-1.3%) also fell in May, mainly on lower prices for basic and semi-finished iron or steel products (-1.2%). Steel prices fell in North America and globally in response to slowing economic activity. Benchmark prices for steel rebar in China hit their lowest in three years in May, as a result of declining investment in the property sector, as well as weak seasonal demand.
Prices for intermediate food products (-3.8%) declined for the fourth consecutive month in May. Year over year, prices for this category posted a 13.4% decline, the largest drop since the beginning of the series in January 2010. The monthly decline in May 2023 was mainly due to lower prices for canola oil (-6.8%), oilseed cake and meal (-7.8%) and soybean oil (-11.7%). Canola oil prices fell in line with other vegetable oil prices, partly due to expectations of a record year for canola and soybean production in Canada and the United States.
Prices for meat, fish and dairy products rose 2.2% month over month in May, the fourth consecutive monthly increase. Compared with the same month in 2022, prices were 4.5% higher in May. Monthly prices in May 2023 rose for meat products including fresh and frozen pork (+4.0%), fresh and frozen beef and veal (+1.4%) and fresh and frozen chicken (+12.4%). Prices for beef have been trending up since November 2022. In May 2023, the price increase for beef was partially attributable to continued tight supply in both Canada and the US, with slaughter falling in both countries on a year-over-year basis in the month. This coincides with the seasonal peak in meat demand that typically occurs in the summer months. In spite of the price rebound for pork in April and May, prices were 6.6% lower compared with May 2022. From January to April 2023, Canadian pork exports by value fell 13.9% compared with the same period in 2022.
Prices for pulp and paper decreased 1.8% in May 2023, mainly on lower prices for wood pulp (-4.5%). A slowdown in global demand along with excess supply put downward pressure on wood pulp prices.
Raw Materials Price Index
The RMPI fell 4.9% on a monthly basis in May, following a 1.8% increase in April. Compared with May 2022, the index posted a decline of 18.4%, the largest year-over-year decline since May 2020 (-19.2%).
Lower prices for crude energy products (-9.3%) were mainly responsible for the monthly RMPI decrease in May 2023. On a yearly basis, prices were 32.9% lower in May. The price of conventional crude oil fell 9.4% month over month in May, and the price of synthetic crude oil (-9.7%) also fell. Excluding crude energy products, the RMPI decreased 2.2%.
Prices for metal ores, concentrates and scrap fell 2.1% month over month in May. Prices fell for zinc ores and concentrates (-10.4%) and iron ores and concentrates (-10.1%). Both of these raw materials are used in the production of steel, for which demand has been falling.
Prices for live animals rose 1.8% in May, mainly due to higher prices for cattle and calves (+2.1%) and hogs (+3.3%). Supply shortage had an impact on cattle prices. On a year-over-year basis, the number of US cattle on feed fell in May for the eighth consecutive month.
Prices for canola (-5.5%) posted a seventh consecutive monthly decrease in May. Year over year, prices were down 37.4%, a record decline since the start of the category in January 1981. Prices for wheat (-4.2%) also fell on a monthly basis in May 2023. Ample supply in Russia, the world's largest wheat exporter, put downward pressure on global wheat prices. The extension of the Black Sea grain deal, which allows Ukraine to continue to exporting grain, also played a part in lower prices.
Note to readers
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. Canadian producers often indicate goods' prices in foreign currencies, especially in US dollars, which 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.
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 introduces Statistics Canada's producer price indexes: what they are, how they are made and what they are used for.
Increased sample size for certain series
Effective with the release of April 2023 data, the sample size for certain IPPI and RMPI indexes has been increased to improve their quality. The complete list of these indexes can be obtained upon request.
The industrial product and raw materials price indexes for June will be released on July 18.
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; firstname.lastname@example.org) or Media Relations (email@example.com).