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Canadian Industrial Product Price Index Up 0.5% in November

In November, the Canadian Industrial Product Price Index (IPPI) increased 0.5 percent and the Raw Materials Price Index was up 3.5 percent compared with October, according to Statistics Canada. The upward pressure on both indexes came mainly from petroleum and metals prices.

The IPPI rose 0.5 percent in November, the same growth rate as in October and the fourth consecutive monthly advance. In November, the IPPI was pushed upward primarily by petroleum and coal products (+3.9 percent) and to a lesser extent by primary metal products (+0.7 percent).

Increases in petroleum and coal products prices were sustained largely by strong demand in emerging countries and colder weather in Europe, though global petroleum inventories remained high.

For primary metal products, the advance in prices was smaller than in the previous four months, as it was moderated by a decline in nickel products (-4.3 percent). Nickel prices were affected by weaker demand for stainless steel in Asia and by higher world inventories of nickel. In contrast, demand for precious metals continued its strong growth, driving up prices of precious metal basic manufactured shapes (+12.5 percent) and silver and platinum (+10.1 percent).The IPPI's increase was moderated by a 0.4 percent decline in prices for motor vehicles and other transportation equipment. This decrease was attributable to a 0.5 percent appreciation in the value of the Canadian dollar relative to the US dollar.

Some Canadian producers who export their products to the United States are generally paid on the basis of prices set in US dollars. Consequently, the strength of the Canadian dollar in relation to the US dollar had the effect of reducing the corresponding prices in Canadian dollars. Without the impact of the exchange rate, the IPPI would have risen 0.7 percent instead of 0.5 percent.

Excluding petroleum and coal prices, the IPPI would have increased 0.2 percent in November, following a 0.1 percent advance in October.

12-month Change
The IPPI rose 2.1 percent in November compared with the same month a year earlier, after advancing 2.4 percent in October. The upward trend continued, as the Index posted its eighth consecutive year-over-year increase. Of the 21 major commodity aggregations, 14 were up and 7 decreased.

In the past 12 months, the upward pressure on the IPPI came mainly from higher prices for primary metal products (+11.5 percent), petroleum and coal products (+7.0 percent) and, to a lesser extent, chemical products (+3.2 percent).

The 4.6 percent increase in the value of the Canadian dollar relative to the US dollar dampened the IPPI's year-over-year advance in November. Without the impact of the exchange rate, the IPPI would have risen 3.2 percent instead of 2.1 percent.

Prices for motor vehicles and other transportation equipment, which are particularly sensitive to the exchange rate, fell 2.3 percent in November compared with the same month a year earlier, continuing the downward movement that started in October 2009.

Year-over-year, the IPPI excluding petroleum and coal would have climbed 1.6 percent in November, following a 1.8 percent advance in October. It was the seventh consecutive year-over-year increase.

Raw Materials Price Index
The Raw Materials Price Index (RMPI) rose 3.5 percent in November, primarily because of higher prices for mineral fuels (+7.0 percent), non-ferrous metals (+2.1 percent) and vegetable products (+3.2 percent). Crude oil prices were up 7.7 percent after increasing 2.5 percent in October.

In November, the RMPI's advance was moderated by lower prices for animals and animal products (-2.5 percent).

Excluding mineral fuels, the RMPI would have risen 0.6 percent in November, a smaller gain than the previous four monthly increases.

Compared with the same month a year earlier, the RMPI was up 6.8 percent, following a 5.7 percent advance in October. Year-over-year, the RMPI has been on an upward trend since November 2009. The main contributors to the RMPI's year-over-year increase in November were prices of non-ferrous metals (+16.5 percent), vegetable products (+21.9 percent), mineral fuels (+2.2 percent) and animals and animal products (+5.1 percent).

Year-over-year, excluding mineral fuels, the RMPI would have increased 11.1 percent in November, a larger gain than in September (+10.9 percent) but smaller than in October (+13.5 percent).

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