Canada June Industrial Product and Raw Materials Prices (Text)
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) declined 0.3% in June compared with May. The decrease was largely attributable to lower prices for petroleum and coal products (-5.0%), but was partly offset by an increase in motor vehicles and other transportation equipment (+1.0%). The Raw Materials Price Index (RMPI) fell 4.0%, mainly as a result of crude oil (-10.1%).
Industrial Product Price Index, monthly change
The IPPI recorded a second consecutive decline in June, following a 0.1% decrease in May. The index was pulled downward primarily by petroleum and coal products, particularly diesel fuel (-7.1%) and motor gasoline (-3.6%).
The IPPI excluding petroleum and coal products rose 0.5% in June.
Chemicals and chemical products (-0.4%) and primary metal products (-0.3%) also contributed to the decrease of the IPPI.
Among the chemical products group, lower prices for fertilizers (-2.1%) and industrial chemicals (-0.4%) contributed the most to the decrease.
Prices for primary metal products were driven down by copper and copper alloy products (-2.4%) and aluminum products (-1.7%), but were moderated by other non-ferrous metal products (+1.6%).
Motor vehicles and other transportation equipment increased 1.0%, slowing the decline of the IPPI. More modest advances were observed in meat, fish and dairy products (+1.0%), lumber and other wood products (+0.9%) and pulp and paper products (+0.6%).
Some Canadian producers who export their products are generally paid on the basis of prices set in US dollars. Consequently, the 1.8% depreciation of the Canadian dollar in relation to the US dollar in June had the effect of increasing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have fallen 0.8% instead of 0.3%.
12-month change in the Industrial Product Price Index
Compared with the same month a year earlier, the IPPI was up 0.4%, continuing the year-over-year increases observed since April 2010. With the exception of May, the growth has been decelerating continuously since September 2011, when it was 5.6%.
The IPPI was pushed upward mainly by higher prices for motor vehicles and other transportation equipment (+3.5%), particularly motor vehicles (+4.9%).
Lumber and other wood products (+7.0%) and meat, fish and dairy products (+2.7%) made more modest contributions to the increase.
Compared with June 2011, the advance of the IPPI was moderated largely by primary metal products (-7.4%), which posted an eighth consecutive decline. Petroleum and coal products (-3.2%) also moderated the increase.
The IPPI excluding petroleum and coal products was up 1.0% from June 2011.
The 5.0% year-over-year decline in the value of the Canadian dollar against the US dollar contributed to the advance of the index. Without the impact of the exchange rate, the IPPI would have fallen 0.8% instead of increasing 0.4%.
Raw Materials Price Index, monthly change
The RMPI (-4.0%) posted its fifth straight decline in June, following decreases in April (-2.1%) and May (-1.1%).
The decline in the RMPI was mostly a result of mineral fuels (-9.4%), particularly crude oil (-10.1%). The RMPI excluding mineral fuels was up 0.7%.
More modest downward pressure was exerted on the index by non-ferrous metals (-1.2%).
Non-ferrous metals were pushed down largely by copper and nickel concentrates (-2.5%), as well as by non-ferrous metal scrap (-3.2%).
Moderating the decline in the RMPI were animals and animal products (+3.1%), as a result of strong prices for hogs-swine for slaughter (+16.7%), and wood (+3.0%), which was supported by increased prices for logs and bolts (+3.6%).
12-month change in the Raw Materials Price Index
Compared with the same month a year earlier, the RMPI was down 11.7%, its fourth consecutive decrease. Prior to March, the RMPI had been increasing since November 2009.
The year-over-year index was pulled downward primarily by mineral fuels (-19.9%), specifically crude oil (-20.3%). Non- ferrous metals (-11.8%), particularly copper concentrates (- 15.6%), also contributed to the decline.
Animals and animal products (+5.6%) and wood (+3.2%) were the only commodity groups to post year-over-year increases in June. As with the previous month, higher prices for slaughter cattle (+11.4%) and slaughter calves (+11.6%) were the main factors in the increase in animal products, while logs and bolts (+3.8%) was the main factor in the increase in wood prices.
Year over year, the RMPI excluding mineral fuels was down 4.1%.
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.
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