Canada's Industrial Product Price Index falls 0.3% in September from August, led by lower prices for primary metal products, petroleum and coal products; Raw Materials Price Index down 1.5%, led by mineral fuels and vegetable products: Statistics Canada

Cindy Allen

OTTAWA , October 29, 2013 (press release) – The Industrial Product Price Index ( IPPI) declined 0.3% in September, mainly because of lower prices for primary metal products and petroleum and coal products. The Raw Materials Price Index ( RMPI) fell 1.5%, led by mineral fuels and vegetable products.

Chart description: Prices for industrial goods decrease

CSV version of chart 1

Industrial Product Price Index, monthly change

After three consecutive monthly advances, the IPPI was down 0.3% in September, with 12 of the 21 major commodity groups posting declines.

Primary metal products (-0.9%) was the largest contributor to the decline of the index, mainly as a result of lower prices for aluminum products (-1.7%), copper and copper alloy products (-2.1%) and other non-ferrous metal products (-0.9%).

The decrease in the IPPI was also attributable to petroleum and coal products (-0.4%), which was down for the first time since April 2013. The downward movement was primarily a result of lower prices for gasoline (-1.9%). The IPPI excluding petroleum and coal products declined 0.2% in September.

To a lesser extent, meat, fish and dairy products (-0.9%) also contributed to the decrease in the IPPI, mainly because of lower prices for meat products (-1.4%).

Among other commodity groups posting declines was motor vehicles and other transportation equipment (-0.3%). This decrease was largely attributable to the appreciation of the Canadian dollar relative to the US dollar in September.

Some Canadian producers who export their products report their prices in US dollars. Consequently, the 0.6% increase in the value of the Canadian dollar relative to the US dollar may have had the effect of decreasing the IPPI. Without the measurable effect of the exchange rate, the index would have fallen 0.1% instead of 0.3%.

Conversely, the decline of the IPPI was moderated slightly by lumber and other wood products (+0.8%), mainly because of higher prices for softwood lumber (+2.2%).

Industrial Product Price Index, 12-month change

The IPPI rose 1.0% in the 12-month period ending in September, after increasing 1.7% in August. On a year-over-year basis, the index has not recorded a decline since December 2012.

Compared with September 2012, the advance of the IPPI was mainly attributable to motor vehicles and other transportation equipment (+3.5%), specifically motor vehicles (+4.7%). The depreciation of the Canadian dollar relative to the US dollar on a year-over-year basis was largely responsible for the increase.

Petroleum and coal products (+2.3%) also exerted upward pressure on the index on a year-over-year basis, largely as a result of higher prices for other petroleum and coal products (+7.1%), specifically liquefied petroleum gases (+17.7%). The fuel oils and other fuel group (+3.7%), particularly diesel fuel, was also up in relation to September 2012. The IPPI excluding petroleum and coal products advanced 0.7% on a year-over-year basis.

To a lesser extent, pulp and paper products (+3.9%) also contributed to the year-over-year increase in the IPPI, mainly as a result of higher prices for pulp (+7.1%). Lumber and other wood products, electrical and communication products, and machinery and equipment also posted higher prices over a 12-month period.

Compared with September 2012, the 5.4% depreciation of the Canadian dollar relative to the US dollar may have had the effect of increasing the IPPI. Without the measurable effect of the exchange rate, the index would have declined 0.4% instead of rising 1.0%.

Compared with the same month a year earlier, the growth of the IPPI was moderated largely by primary metal products (-6.0%), particularly other non-ferrous metal products (-17.8%). The decline in other non-ferrous metal products was led by lower prices for silver and platinum, on a year-over-year basis.

Raw Materials Price Index, monthly change

The RMPI fell 1.5% in September, the first decrease since April 2013. Although all major commodity groups posted lower prices, the decline of the RMPI was mostly attributable to mineral fuels and vegetable products.

Chart description: Prices for raw materials decline

CSV version of chart 2

Mineral fuels (-0.9%) was the largest contributor to the decrease in the RMPI, as a result of lower prices for crude oil (-1.0%). The RMPI excluding mineral fuels was down 2.0% in September.

Vegetable products (-5.3%) also exerted downward pressure on the RMPI, primarily because of lower prices for oilseeds (-12.4%) and grains (-5.0%). It was the largest decrease in vegetable products since October 2008.

To a lesser extent, non-ferrous metals (-2.4%) also contributed to the decline of the RMPI. All major non-ferrous metal groups posted lower prices in September, with the exception of non-ferrous metal scrap, which rose 0.7%. The largest contributors to the decrease were copper concentrates (-3.5%) and radioactive concentrates (-5.0%).

Raw Materials Price Index, 12-month change

During the 12-month period ending in September, the RMPI advanced 2.1% after increasing 5.1% in August.

Compared with September 2012, mineral fuels (+8.5%) was the largest contributor to the increase of the RMPI, mainly as a result of higher prices for crude oil (+8.6%). The RMPI excluding mineral fuels was down 3.6% on a year-over-year basis.

Among other commodity groups that contributed to the year-over-year increase in the RMPI were animals and animal products (+7.2%), ferrous materials (+10.5%) and wood products (+3.4%).

Compared with the same month a year earlier, non-ferrous metals (-11.8%) slightly moderated the upward movement of the RMPI, mainly because of lower prices for copper concentrates (-12.1%), precious metals (-20.8%) and radioactive concentrates (-24.9%).

Vegetable products (-15.4%) was also down on a year-over-year basis.

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