Canada's Industrial Product Price Index rose 1% in February from January, driven by higher prices for energy, petroleum products; Raw Materials Price Index increased 5.7%, led by crude energy products: Statistics Canada

Cindy Allen

OTTAWA , April 1, 2014 (press release) – The Industrial Product Price Index ( IPPI) rose 1.0% in February, mainly because of higher prices for energy and petroleum products. The Raw Materials Price Index ( RMPI) increased 5.7%, led by crude energy products.

Chart description: Prices for industrial goods increase

CSV version of chart 1

Industrial Product Price Index, monthly change

The IPPI increased 1.0% in February, following a 1.4% gain in January. It was the fourth consecutive monthly advance. The increase in the IPPI was broad-based, as 16 of the 21 major commodity groups were up.

The growth of the IPPI was mainly attributable to higher prices for energy and petroleum products (+2.4%). Motor gasoline (+2.5%) and diesel fuel (+4.1%) led the increase in this commodity group. The IPPI excluding energy and petroleum products was up 0.8% in February.

Chemicals and chemical products (+2.1%) also contributed to the increase in the IPPI, influenced by higher prices for petrochemicals (+7.9%). The chemicals and chemical products group has not declined since October 2013.

Motorized and recreational vehicles (+0.7%) posted a fifth consecutive increase, mainly as a result of higher prices for passenger cars and light trucks (+0.8%). The advance of the motorized and recreational vehicles index was closely linked to the depreciation of the Canadian dollar relative to the US dollar.

Some Canadian producers who export their products report their prices in US dollars. Consequently, the 1.0% decrease in the value 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 risen 0.8% instead of 1.0%.

To a lesser extent, meat, fish, and dairy products (+1.4%) and primary non-ferrous metal products (+1.2%) also exerted upward pressure on the IPPI.

Higher prices for meat products (+2.1%), specifically fresh and frozen pork (+8.8%), were mainly responsible for the advance of the meat, fish, and dairy product group.

The primary non-ferrous metal products group was led by higher prices for unwrought precious metals and precious metal alloys (+3.0%), specifically silver (+6.0%) and gold (+3.9%).

Industrial Product Price Index, 12-month change

The IPPI increased 1.8% during the 12-month period ending in February, after rising 2.3% in January.

Compared with February 2013, the growth of the IPPI was mainly attributable to higher prices for motorized and recreational vehicles (+5.3%), specifically passenger cars and light trucks (+5.9%). On a year-over-year basis, prices for motorized and recreational vehicles have been increasing since July 2013.

Energy and petroleum products (+3.5%) also contributed to the year-over-year increase in the IPPI, as a result of higher prices for light fuel oils (+9.7%) and diesel fuel (+8.2%). The IPPI excluding energy and petroleum products rose 1.5% on a year-over-year basis.

Chemicals and chemical products were up 5.2% compared with February 2013, primarily because of higher prices for petrochemicals (+13.6%).

To a lesser extent, meat, fish, and dairy products (+3.4%) also contributed to the year-over-year increase in the IPPI, mostly as a result of higher prices for fresh and frozen pork.

Conversely, the growth of the IPPI over the 12-month period was moderated mainly by lower prices for primary non-ferrous metal products (-8.1%), specifically unwrought precious metals and precious metal alloys (-16.6%). On a year-over-year basis, primary non-ferrous metal products have been declining since December 2011.

Raw Materials Price Index, monthly change

The RMPI rose 5.7% in February, after advancing 2.8% in January. This was the third consecutive monthly increase and the largest gain since June 2009.

Chart description: Prices for raw materials rise

CSV version of chart 2

Although all major commodity groups posted price increases compared with January, the growth of the RMPI was mostly attributable to crude energy products (+9.4%). Conventional crude oil led the increase of this commodity group, up 9.8%. The RMPI excluding crude energy products increased 1.5% in February.

Animals and animal products (+1.9%) and crop products (+3.4%) also contributed to the increase of the RMPI.

Live animals (+3.6%), particularly hogs (+8.8%), were responsible for the growth of the animals and animal products group. The increase of hog prices in February was partly attributable to the pork epidemic diarrhea virus in North America.

Other crop products (+3.6%) as well as fresh fruit, nuts and vegetables (+5.7%) contributed the most to the advance of the crop products group.

Among other commodity groups that posted gains were metal ores, concentrates and scrap (+0.5%) as well as logs, pulpwood, natural rubber and other forestry products (+0.7%).

Raw Materials Price Index, 12-month change

The RMPI rose 3.9% during the 12-month period ending in February, after increasing 0.3% in January.

Compared with the same month a year earlier, the growth of the RMPI was mainly due to higher prices for crude energy products (+12.0%), specifically conventional crude oil (+11.9%). On a year-over-year basis, the RMPI excluding crude energy products was down 4.3%.

To a lesser extent, animals and animal products (+3.8%) also contributed to the year-over-year increase in the RMPI, as a result of higher prices for live animals (+8.3%), particularly cattle and calves (+18.4%).

Conversely, the growth of the RMPI over a 12-month period was moderated primarily by lower prices for metal ores, concentrates and scrap (-10.1%), which have been declining since January 2013.

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