The following is the text of the industrial product and raw material prices report as reported by Statistics Canada.
The Industrial Product Price Index (IPPI) edged down 0.1% in August compared with July, largely the result of lower prices for motor vehicles and other transportation equipment. The Raw Materials Price Index (RMPI) rose 3.4% in August, mostly because of higher prices for mineral fuels, specifically crude oil.
Industrial Product Price Index, monthly change
The IPPI posted a fourth consecutive decline in August. However, the decrease of the index was smaller than in the previous three months. Of the 21 major commodity groups, 13 were down while 4 were up.
The motor vehicles and other transportation equipment group (-1.3%) made the largest contribution to the decline of the IPPI, primarily due to lower prices for motor vehicles (-1.8%). The increase in the value of the Canadian dollar against the US dollar in August was largely responsible for the decline.
Some Canadian producers who export their products are generally paid on the basis of prices set in US dollars. Consequently, the 2.2% increase in the value the Canadian dollar relative to the US dollar in August had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.4% instead of falling 0.1%.
Downward pressure on the IPPI also came from primary metal products (-0.8%), specifically lower prices for aluminum products (-2.8%), copper and copper alloy products (-3.0%) and nickel products (-5.2%).
Conversely, the decline of the IPPI was moderated mainly by higher prices in the petroleum and coal products group (+3.4%), especially fuel oils and other fuel (+4.4%) and gasoline (+2.5%).
The IPPI excluding petroleum and coal products fell 0.5% in August.
Industrial Product Price Index, 12-month change
Compared with August 2011, the IPPI was down 0.3%. This was the first year-over-year decrease of the index since March 2010.
The main contributor to the decline of the IPPI was the primary metal products group (-10.7%), particularily other non- ferrous metal products (-14.9%), aluminum products (-15.0%), nickel products (-28.4%) and copper and copper alloy products (- 12.6%). Silver and platinum were largely responsible for the decrease in other non-ferrous metal products.
Among the other major commodity groups that contributed to the IPPI decline were chemical products and pulp and paper products.
Compared with August 2011, the IPPI decline was moderated primarily by lumber and other wood products (+7.0%), specifically as a result of higher prices for lumber and ties. The motor vehicles and other transportation equipment group was also up on a year-over-year basis.
The 0.9% year-over-year decrease in the value of the Canadian dollar against the US dollar moderated the IPPI decline. Without the impact of the exchange rate, the IPPI would have fallen 0.6% instead of 0.3%.
Raw Materials Price Index, monthly change
The RMPI rose 3.4% in August, the second consecutive monthly increase, posting the largest gain since November 2011.
The increase in the RMPI was largely a result of higher prices for mineral fuel (+9.1%), specifically crude oil (+9.8%). The RMPI excluding mineral fuels was down 1.3% in August.
Among the other commodity groups, only vegetable products (+0.1%) rose. The increase was mostly attributable to grains (+4.3%), specifically corn, wheat and barley.
The advance in the RMPI was moderated by lower prices for non-ferrous metals (-3.0%), pushed downward mainly by copper and nickel concentrates as well as radioactive concentrates.
Raw Materials Price Index, 12-month change
Compared with August 2011, the RMPI fell 4.0%, the sixth consecutive year-over-year decrease. Overall, five of the seven major commodity groups were down.
The largest contributor to the decline of the index was non-ferrous metals (-13.6%), particularly copper and nickel concentrates (-17.2%) and other non-ferrous base metals (-21.1%).
Lower mineral fuel prices (-2.7%) also contributed to the year-over-year decrease in the RMPI. Other commodity groups that posted declines were ferrous materials, vegetable products, and animals and animal products.
Compared with August 2011, the RMPI decline was slightly moderated by wood products (+6.5%), specifically due to higher prices for logs and bolts.
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 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 release, 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.
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