Costs of petroleum and metals drive up producer prices
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Canadian producer prices rose in 2010, as indicated by the 1.0% rise in the Industrial Product Price Index, following a 3.5% decline in 2009. This index measures the price that companies charge for their manufactured goods at the plant gate.
This rise in producer prices is mostly the result of higher prices for petroleum and metals. Even though global inventories of petroleum remained high, the cost of petroleum and coal products rose 12.8%, pushed by strong demand in emerging economies and colder weather in Europe. Prices of primary metals rose 10.5% as a result of stronger demand in 2010 compared with 2009.
The overall increase in producer prices was moderated by a decline in the cost of motor vehicles (5.7%), primarily because of the appreciation of the Canadian dollar against the U.S. dollar by 10.8%. Producers who export to the United States are generally paid on the basis of prices set in U.S. dollars, so the strength of the Canadian dollar reduced the corresponding prices in Canadian dollars.