Industrial product and raw materials price indexes
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From January to February, the Industrial Product Price Index (IPPI) edged up 0.2%, led by petroleum and coal products and primary metals. The Raw Materials Price Index (RMPI) declined 0.5%, largely because of mineral fuels.
Prices for industrial goods increase slightly
Chart description: Prices for industrial goods increase slightly
Industrial Product Price Index, monthly change
The IPPI increased in February for a second consecutive month. The advance of the index was primarily the result of higher prices for petroleum and coal products (+1.8%) and primary metal products (+1.9%).
Gasoline prices (+3.9%), which also rose in January (+3.5%), were the major contributor to the increase in petroleum and coal products.
Primary metals prices (+1.9%) advanced for a second consecutive month, mostly because of increases in copper and copper alloy products (+2.6%) and aluminum products (+0.9%). Copper prices were supported by reduced world supply as a result of labour disputes and poor weather that affected the normal course of production at some mines, particularly in South America.
Some product groups declined in February, particularly motor vehicles and other transportation equipment (-1.0%). Prices for certain products were affected by the 1.7% appreciation of the Canadian dollar relative to the US dollar.
Note to readers
All data in this release are seasonally unadjusted and usually subject to revision for a period of six months (for example, when the July index is released, the index for the previous January becomes final).
The Industrial Product Price Index (IPPI) reflects the prices that producers in Canada receive as the goods leave the plant gate. It does not reflect what the consumer pays. Unlike the Consumer Price Index, the IPPI excludes indirect taxes and all the costs that occur between the time a good leaves the plant and the time the final user takes possession of it, including transportation, wholesale and retail costs.
Canadian producers export many goods. They often indicate their prices in foreign currencies, especially in US dollars, which are then converted into Canadian dollars. In particular, this is the case for motor vehicles, pulp, paper and wood products. Therefore, a rise or fall in the value of the Canadian dollar against its US counterpart affects the IPPI. But the conversion into Canadian dollars only reflects how respondents provide their prices. Moreover, this is not a measure that takes into account the full effect of exchange rates, since that is a more difficult analytical task.
The conversion of prices received in US dollars is based on the average monthly exchange rate (noon spot rate) established by the Bank of Canada and is available on CANSIM in table 176-0064 (series v37426). Monthly and annual variations in the exchange rate, as described in the text, are calculated according to the indirect quotation of the exchange rate (for example, CAN$1 = US$X).
The Raw Materials Price Index (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.
Some Canadian producers who export their products are generally paid on the basis of prices set in US dollars. Consequently, the strength of the Canadian dollar in relation to the US dollar in February had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have increased 0.6% instead of 0.2%.
The IPPI excluding petroleum and coal products declined 0.1% in February.
12-month change in the Industrial Product Price Index
Compared with the same month a year earlier, the IPPI increased 1.7% in February. However, a slowdown in growth has been observed since September 2011 (+5.6%). In February, 17 of the 21 major commodity aggregations increased.
Relative to February 2011, the IPPI was pushed upward mainly by higher prices for petroleum and coal products (+10.7%). On a year-over-year basis, the last decrease in that product group was in October 2009.
Chemical products (+2.2%) and motor vehicles and other transportation equipment (+1.0%) also made modest contributions to the year-over-year increase of the index.
Relative to the same month a year earlier, the IPPI excluding petroleum and coal products rose 0.5%, a slightly slower pace than in preceding months.
The advance of the IPPI relative to February 2011 was primarily moderated by a decrease in primary metal products (-4.6%), which posted its fourth consecutive monthly decline. Within this group, the most influential decreases were observed in nickel (-26.6%), copper and copper alloys (-12.3%) and aluminum (-6.2%) products.
In February, the 0.9% year-over-year decline in the value of the Canadian dollar relative to the US dollar contributed to the advance of the index. Without the impact of the exchange rate, the IPPI would have risen 1.5% instead of 1.7%.
Raw Materials Price Index, monthly change
The RMPI fell 0.5% in February, after slightly increasing 0.2% in January. The index has been following a similar pattern since August 2011, alternating between increases and decreases from month to month.
Prices for raw materials decrease
Chart description: Prices for raw materials decrease
The decline of the RMPI was mainly attributable to mineral fuels (-2.4%), specifically crude petroleum (-2.4%), which was down for a third consecutive month. Much more modest contributions to the decrease of the index were made by ferrous metals (-1.2%) and animals and animal products (-0.2%).
However, the decline of the RMPI was offset by higher prices for non-ferrous metals (+2.6%) and vegetable products (+2.5%). Copper concentrates (+3.4%) pushed non-ferrous metals upward, while natural rubber and allied gums (+12.1%) were largely responsible for the increase in vegetable products. Rubber prices were sustained by strong demand from Asia, where the commodity is used in tire manufacturing.
The RMPI excluding mineral fuels posted a 1.3% increase in February, its second consecutive monthly advance.
12-month change in the Raw Materials Price Index
Compared with the same month a year earlier, the RMPI posted a 1.5% increase in February. The advance, however, reflects a slowdown in growth since May 2011, when a 25.6% increase was reported.
Year over year, the RMPI was pushed upward primarily by higher prices for mineral fuels (+9.5%), as crude petroleum (+10.6%) continued its upward movement.
Compared with February 2011, animals and animal products (+6.4%) also contributed to the advance of the index, largely because of higher prices for slaughter cattle (+9.4%).
Relative to February 2011, the growth of the RMPI was moderated by lower prices for non-ferrous metals (-13.7%) and vegetable products (-10.1%).
Year over year, the RMPI without mineral fuels fell 5.0% in February, its third consecutive monthly decline.
Available without charge in CANSIM: tables 329-0056 to 329-0068 and 330-0007.
Table 329-0056: Industrial Product Price Index by major commodity aggregations.
Table 329-0057: Industrial Product Price Index by industry.
Table 329-0058: Industrial Product Price Index by stage of processing.
Tables 329-0059 to 329-0068: Industrial Product Price Index by commodity.
Table 330-0007: Raw Materials Price Index by commodity.
Definitions, data sources and methods: survey numbers, including related surveys, 2306 and 2318.
The February 2012 issue of Industry Price Indexes (62-011-X, free) will soon be available.
The industrial product and raw materials price indexes for March will be released on April 30.
For more information, or to enquire about the concepts, methods or data quality of this release, contact Statistics Canada's National Contact Centre (toll-free 1-800-263-1136; 613-951-8116; infostats@statcan.gc.ca) or the Media Hotline (613-951-4636; statcan.mediahotline-ligneinfomedias.statcan@canada.ca), Communications Division.
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