Canadian Industrial Product Price Index Edges Up In March

The Industrial Product Price Index (IPPI) rose 0.3% in March compared with February, due to the depreciation of the Canadian dollar against the US dollar and higher prices for primary metals, according to Statistics Canada. The Raw Materials Price Index (RMPI) advanced 12.1% compared with February, pushed up by a strong increase in crude oil prices.
 
Motor vehicles and other transport equipment rose 0.9%, as a result of the depreciation of the Canadian dollar in relation to its US counterpart. Prices for primary metal products increased 1.3%, pushed up by copper and copper alloys in primary forms. These increases were offset in part by lower prices for metal fabricated products, petroleum and coal products as well as chemical products.
 
The Canadian dollar lost 1.5% of its value against the US dollar in March. Some Canadian producers who export their products to the United States are paid in prices set in US dollars. If the exchange rate used to convert these prices had remained unchanged, the IPPI would have declined 0.1% instead of rising 0.3%.
 
12-month change
Year over year, the IPPI edged down 0.1% in March, marking a change in direction compared with the increases observed in the previous 11 months.The effect on the IPPI of lower prices for petroleum and coal products and primary metal products was offset in part by higher prices for motor vehicles and other transport equipment, pulp and paper products, machinery and equipment, and electrical and communication products.
 
On a 12-month basis, prices for petroleum and coal products fell 33.4%, compared with the drop of 27.8% in February. Prices for products excluding petroleum and coal products rose 4.5%, down from the 5.2% increase recorded in February.
 
The Canadian dollar has lost 20.8% of its value since March 2008, and if the direct effect of the exchange rate had been excluded, the IPPI would have declined 6.8% instead of 0.1%.
 
Raw Materials Price Index
The RMPI registered a month-over-month increase of 12.1% in March, up from the growth rates of 1.5% in January and 1.6% in February. Almost all the growth in March was attributable to mineral fuels.
 
Mineral fuels rose 25.9% in March and crude oil, the main component of this group, increased 33.1%. The last time crude oil recorded a comparable month-over-month increase was in September 1990 when it advanced 29.5%. Nevertheless, the crude oil index is still down 56.3% from its all-time high reached in July 2008.
 
Excluding mineral fuels, the RMPI increased 2.5%, following a 0.4% decline in February. The strongest increases were for non-ferrous metals, animals and animal products and vegetable products.
 
From March 2008 to March 2009, raw material prices fell 27.2%, comparable to the changes recorded since December 2008. The year-over-year drop in raw material prices was attributable to the strong 38.5% decline for mineral fuels and, to a lesser extent, to decreases in the prices for non-ferrous metals (-36.0%) and vegetable products (-20.1%).
 
Source: Statistics Canada