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Canadian Industrial Product Price Index Down 0.5% in May

The Canadian Industrial Product Price Index was down 0.5 percent in May, primarily due to lower prices for energy and petroleum products. The Raw Materials Price Index declined 0.4 percent, led by lower prices for animals and animal products.

IPPI Monthly Change

The IPPI declined 0.5 percent in May, following a 0.2 percent decrease in April. Of the 21 major product groups, three were up, 12 were down and six were unchanged.

The decrease of the IPPI was mainly attributable to lower prices for energy and petroleum products (-1.3 percent). Diesel fuel (-3.2 percent), light fuel oils (-3.1 percent) and motor gasoline (-0.4 percent) were the main reasons for the decline in this commodity group.

Motorized and recreational vehicles (-0.6 percent) declined for the second consecutive month, led by lower prices for passenger cars and light trucks (-0.8 percent), motor vehicle engines and motor vehicle parts (-0.3 percent) and aircraft (-0.9 percent). The decline of motorized and recreational vehicle prices was closely linked to the appreciation of the Canadian dollar relative to the U.S. dollar.

Chemicals and chemical products (-1 percent) declined for the third consecutive month, led by lower prices for petrochemicals (-3.6 percent), primarily aromatic hydrocarbon gases (-4.9 percent), as well as liquefied refinery gases and acyclic hydrocarbons not elsewhere classified (-4.7 percent).

The decline of the IPPI was also due to lower prices for meat, fish, and dairy products (-0.7 percent). Fresh and frozen pork (-5.3 percent) decreased for the first time since December 2013 and was the main reason for the decline in this commodity group.

To a lesser extent, primary non-ferrous metal products (-0.5 percent) declined for the second consecutive month, primarily as a result of lower prices for unwrought precious metals and precious metal alloys (-0.8 percent) and unwrought aluminum and aluminum alloys (-1.9 percent). The decline was moderated by higher prices for unwrought copper and copper alloys (+2.8 percent).

Some Canadian producers who export their products report their prices in U.S. dollars. Consequently, the 0.9 percent increase in the value of the Canadian dollar relative to the U.S. dollar may have had the effect of decreasing the IPPI. Without the measurable effect of the exchange rate, the index would have fallen 0.3 percent instead of 0.5 percent.

IPPI 12-Month Change

The IPPI increased 3.4 percent during the 12-month period ending in May, after rising 3.9 percent in April.

Compared with May 2013, the growth of the IPPI was mainly attributable to energy and petroleum products (+6.8 percent), specifically motor gasoline (+5.2 percent), light fuel oils (+13.2 percent) and diesel fuel (+11.1 percent). The IPPI excluding energy and petroleum products rose 2.7 percent on a year-over-year basis.

Motorized and recreational vehicles (+4.4 percent) also contributed to the year-over-year increase in the IPPI, as a result of higher prices for passenger cars and light trucks (+4.4 percent), motor vehicle engines and motor vehicle parts (+3.2 percent) and aircraft (+8.7 percent). On a year-over-year basis, prices for motorized and recreational vehicles have been on an upward trend since July 2013.

Compared with May 2013, meat, fish, and dairy products rose 8.3 percent, mainly due to higher prices for fresh and frozen pork (+34.7 percent) and fresh and frozen beef and veal (+9.1 percent).

To a lesser extent, chemicals and chemical products (+3.3 percent) and the primary ferrous metals group (+9.4 percent) also contributed to the year-over-year increase in the IPPI.

The gain in chemicals and chemical products was mostly a result of higher prices for plastic resins (+10.8 percent) as well as ammonia and chemical fertilizers (+11.2 percent).

The year-over-year advance of primary ferrous metal products (+9.4 percent) was led by higher prices for iron and steel basic shapes (+12.6 percent) as well as wire and other rolled and drawn steel products (+8.8 percent).

RMPI Monthly Change

The RMPI decreased 0.4 percent in May, after edging up 0.1 percent in April. This was the first decrease of the index since November 2013. Of the six major commodity groups, three were down and three were up.

The decline of the RMPI was largely driven by lower prices for animals and animal products (-2.9 percent), down for the first time since December 2013. Lower prices for hogs (-9.1 percent) largely explained the decrease in this commodity group. To a lesser degree, fish, shellfish and other fishery products (-10.5 percent) also contributed to the decline in the animals and animal products group.

Logs, pulpwood, natural rubber and other forestry products (-0.6 percent) also pulled the RMPI downward, as prices for natural rubber (-6.1 percent) declined for a second consecutive month.

The decline of the RMPI was mainly offset by crop products (+0.8 percent) in May, mostly because of higher prices for other crop products (+0.7 percent), particularly oilseeds (except canola and soybeans), corn and barley.

The decrease in the RMPI was also moderated by metal ores, concentrates and scrap (+0.2 percent) and crude energy products (+0.1 percent).

RMPI 12-Month Change

The RMPI rose 7.6 percent during the 12-month period ending in May, after increasing 9.1 percent in April.

Compared with May 2013, the growth of the RMPI was mainly due to higher prices for crude energy products (+12.1 percent), primarily conventional crude oil (+12.4 percent). On a year-over-year basis, the RMPI excluding crude energy products was up 2.9 percent.

To a lesser extent, animals and animal products (+11.9 percent) also exerted upward pressure on the RMPI, largely because of higher prices for live animals (+21.1 percent), particularly hogs (+34.2 percent) and cattle and calves (+20.4 percent).

The 12-month increase in the RMPI was moderated mainly by crop products (-5.7 percent), which have been falling on a year-over-year basis since July 2013. The largest contributor to the decline in this commodity group was other crop products (-7.3 percent), particularly grains (except wheat) as well as canola (-24.5 percent).

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