Canadian Price Indexes Decline In April

The Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) were both down 0.5% in April compared with March, halting their upward movements since the start of the year according to Statistics Canada.
 
The decline in the IPPI was led by lower prices for motor vehicles and other transport equipment (-2.2%) and pulp and paper products (-2.3%). These two product groups are more affected by fluctuations in the exchange rate.
 
The Canadian dollar rose 3.3% in April in relation to its US counterpart. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have risen 0.3% instead of declining 0.5%.
 
12-month change
Year over year, the IPPI fell 2.2% in April following a 0.1% decrease in March. This was the largest decline since January 2004, when the IPPI fell 3.1%. The IPPI was pulled down by lower prices for petroleum and coal products (-37.4%) and primary metal products (-14.8%). This decline in prices was partly offset by higher prices for motor vehicles and other transport equipment (+14.4%).
 
On a 12-month basis, prices for products excluding petroleum and coal rose 3.0%, the weakest increase in this rate in 9 months.
 
Since April 2008, the Canadian dollar has lost 17.2% of its value against its US counterpart, and if the direct effect of the exchange rate had been excluded, the IPPI would have fallen 7.6% instead of 2.2%.
 
Raw Materials Price Index
The RMPI posted a month-over-month decline of 0.5% in April, which contrasts with the growth in the first three months of the year, especially the 12.1% increase in March.
 
Prices for mineral fuels declined 2.5%, after increasing 26.0% in March. Excluding mineral fuels, the RMPI advanced 1.4%, down from the 2.5% increase in March. A 5.8% increase in prices for non-ferrous metals partially offset the impact of the decrease for mineral fuels on the RMPI.
 
From April 2008 to April 2009, prices for raw materials fell 31.2%, comparable to the changes recorded since December 2008. The drop in raw material prices was attributable to a strong 45.7% decline for mineral fuels and, to a lesser extent, lower prices for non-ferrous metals (-29.5%) and vegetable products (-15.7%).
 
Source: Statistics Canada