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) was down 0.1% in October compared with September, largely the result of lower prices for petroleum and coal products. The Raw Materials Price Index (RMPI) was unchanged in October. The decline in non- ferrous metals was offset by increases in most commodity groups, particularly mineral fuels.
Industrial Product Price Index, monthly change
The IPPI edged down 0.1% in October, following a 0.5% increase in September. With this decline, the index returned to the same level as in January.
The largest contributor to the IPPI decrease in October was petroleum and coal products (-1.1%). General price declines were observed for gasoline and fuel oil products, especially gasoline (-3.1%), which was down for the first time in four months. The IPPI excluding petroleum and coal products rose 0.2%.
Among other groups that decreased was primary metal products (-0.8%), specifically aluminum products (-2.1%), other non-ferrous metal products (-1.3%) and copper and copper alloy products (-1.9%).
The decrease of the IPPI was moderated primarily by motor vehicles and other transportation equipment (+0.7%), which rose for the first time since June. The decrease of the Canadian dollar against the US dollar in October was largely responsible for the advance.
Most Canadian producers who export their products are paid in US dollars. Consequently, the 0.9% decrease in the value of the Canadian dollar relative to the US dollar in October could have the effect of increasing the corresponding prices in Canadian dollars. Without the measurable impact of the exchange rate, the IPPI would have fallen 0.3% instead of 0.1%.
Increased prices for chemical products; meat, fish and dairy products; and machinery and equipment also moderated the decline of the IPPI.
Industrial Product Price Index, 12-month change
Compared with October 2011, the IPPI was down 0.2%, its third consecutive year-over-year decline.
The index was mainly driven down by primary metal products (-3.1%), in particular, lower prices for aluminum products (- 10.6%) and iron and steel products (-2.9%).
Motor vehicles and other transportation equipment (-1.5%) and chemical products (-3.0%) also contributed significantly to the decline of the IPPI.
The 3.3% year-over-year increase in the value of the Canadian dollar against the US dollar could have the effect of decreasing the IPPI. Without the measurable impact of the exchange rate, the IPPI would have risen 0.6% instead of falling 0.2%.
Compared with October 2011, the IPPI decline was moderated primarily by lumber and other wood products (+7.1%) and, to a lesser extent, by fruit, vegetables, feeds and other food products and by petroleum and coal products.
The IPPI excluding petroleum and coal products fell 0.4% on a year-over-year basis.
Raw Materials Price Index, monthly change
After posting three consecutive monthly increases, the RMPI was unchanged in October. The decline in non-ferrous metals was offset by increases in most commodity groups, particularly mineral fuels.
The decrease in non-ferrous metals (-2.3%) mainly resulted from lower prices for copper concentrates (-3.3%), radioactive concentrates (-5.6%) and zinc concentrates (-3.8%). The decline in copper prices was partly attributable to reduced demand.
Conversely, the decline in metals was moderated by mineral fuels, specifically crude oil (+0.5%), which posted its fourth consecutive increase. The RMPI excluding mineral fuels was down 0.5% in October.
Among other groups that increased were wood products, animals and animal products, and ferrous materials.
Raw Materials Price Index, 12-month change
Compared with October 2011, the RMPI fell 2.8%, its eighth consecutive year-over-year decrease.
The decline of the RMPI was largely the result of mineral fuels, specifically crude oil (-5.3%). The RMPI excluding mineral fuels decreased 0.2% compared with October 2011.
Downward pressure was also exerted on the RMPI by animals and animal products and by ferrous materials.
Compared with October 2011, the RMPI decline was slightly moderated by wood products (+6.4%) and vegetable products (+1.7%).
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. 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 (noon spot rate) established by the Bank of Canada, and it 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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